THE LIBRARY OF THE
UNIVERSITY OF
NORTH CAROLINA
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THE LIBRARY OF THE
UNIVERSITY OF
NORTH CAROLINA
AT CHAPEL HILL
ENDOWED BY THE
DIALECTIC AND PHILANTHROPIC
SOCIETIES
INSTITUTE OF GOVERNMENT
JK4135
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1957-59
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ERSITY OF N.C. AT CHAPEL HILL
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George R. Uzzell
W. W. Wall
Thomas J. White
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Form No. 471
The State of North Carolina t>///2 er
.A3
The Reports
of the 1957-1959
Commission oo Reorganization
of State Government
H. Cloyd Philpott, Chairman
David Clark George R. Uzzell
Shearon Harris W. W. Wall
Addison Hewlett, Jr. Thomas J. White
Robert F. Morgan, Vice-Chairman
CONTENTS
First Report — Interstate Cooperation 5
Second Report — Turnpike Authorities in North Carolina 17
Third Report — State Planning Agencies 23
Fourth Report — North Carolina Utilities Commission 29
Fifth Report — State Legislative Building 41
Sixth Report — Succession to State Executive Offices
and Disability of Officers 55
Seventh Report — Public Records Management 63
Eighth Report — State Board of Alcoholic Control 71
Ninth Report — State Land Management 77
Tenth Report — State Accounting and Disbursement 91
Eleventh Report — Water Resources Management 103
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First Report
Interstate Cooperation
June 26, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency :
The Commission on Reorganization of State Government,
created by Resolution 47 of the General Assembly of 1957, here-
with transmits to Your Excellency the first of its final reports.
This report deals with the agencies through which North Caro-
lina cooperates with her sister states. It is the sincere belief of
the Commission that the adoption of the recommendations con-
tained in this report will help our State to gain the full benefits
of closer cooperation with the other states of the Union.
At this point we think it appropriate to review briefly the
role of the Reorganization Commission as we understand it and
the approach which this Commission has followed in its work.
This is the third of a series of Reorganization Commissions
which has been actively studying our state government since
1953. We have gained a great deal from the experience of the
earlier Commissions, and the presence on this Commission of one
member who served on both of those groups and one member who
served on the second Reorganization Commission has enabled us
to benefit directly from that experience.
Like our predecessors, we have chosen not to propose sweep-
ing changes in an effort to accomplish a complete reorganization
of state government at one stroke. Ours has been the less drama-
tic approach of methodically examining individual agencies,
related groups of agencies, and in some instances problems com-
mon to several agencies, and suggesting only those changes
which we believe to be necessary. The soundness of this policy of
gradual reorganization is, we believe, borne out by the high
degree of success which the first two Reorganization Commis-
sions have had in gaining legislative approval for their recom-
mendations.
In our study of various state agencies and problems, we have
received factual reports concerning the organization, finances,
and activities of each agency under examination, and the laws
creating it and prescribing its functions. These reports have been
provided by our research assistants from the staff of the Institute
of Government of the University of North Carolina. We have
invited the heads of agencies being studied and other interested
state officials to meet with the Commission and have questioned
them extensively.
Like the previous Commissions, we will issue our recom-
mendations in a series of reports covering particular agencies,
areas, or problems of state government. This will, we believe,
enable Your Excellency, the members of the General Assembly,
the press, and the general public to study each of our recom-
mendations in an orderly and systematic manner.
Each report will include, in addition to our recommendations,
a statement of our findings and reasons in support of those re-
commendations. While it is not practical to include in these
reports all of the detailed information presented to us, the Com-
mission will make available to interested persons any of the
written studies presented to us by our staff and others.
The Commission has made each of its recommendations only
after thorough research and careful deliberation. We have not
sought to make changes solely for the sake of change, nor in
order to conform with textbook principles of administrative
organization. We have sought in each case to determine whether
such principles were compatible with the governmental history
and traditions of this State, and we have proposed changes only
where we thought some real benefit would result. We therefore
earnestly recommend that our proposals in this and succeeding
reports be given careful study and that the legislation which
we shall propose be adopted.
At our meeting on April 14, Mr. David Clark tendered his
resignation as Chairman of the Commission, a position which he
had also held with the second Reorganization Commission. Mr.
H. Cloyd Philpott was elected to succeed Mr. Clark as Chairman,
and Mr. Robert F. Morgan was elected Vice-Chairman, a position
previously held by Mr. Philpott. Mr. Clark will continue to serve
as a member of the Commission.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. Wall
Thomas J. White
Richard G. Long, Secretary
Robert F. Morgan, Vice-Chairman
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
INTERSTATE COOPERATION
Agencies Dealt With
1. North Carolina Commission on Interstate Cooperation
2. Governor's Committee on Interstate Cooperation
Explanation of Findings and Recommendations
Introduction
Our concern for the preservation of efficient and responsible
state government generally, and our desire that North Carolina
in particular be prepared to give her citizens the best in govern-
ment, have prompted us to study the various agencies and pro-
grams through which the states share information and experi-
ence gained in dealing with problems common to all and unite
their efforts in dealing with challenges too great for individual
states to handle.
The principal state agency established to work for the im-
provement of interstate cooperation is the North Carolina Com-
mission on Interstate Cooperation, which with like agencies in
the other 47 states forms the Council of State Governments.
Council of State Governments
The Council of State Governments is a non-profit service
agency for all the states, created by the states and governed by
designated representatives of the states. It serves as:
A medium to assist in improving state legislative, admini-
strative and judicial practices.
An agency for cooperation among the states in solving
interstate problems, both regional and national.
A means of facilitating and improving federal-state rela^
tions.
As the governments of the states have grown in responsi-
bilities and public services, their needs for joint fact finding and
cooperation have grown likewise. The Council came into exist-
ence to fill those needs. It has grown as they have grown, through
more than a quarter of a century of progress. The Council
conducts research for the states on major problems— from edu-
cation t<> mental hospitals, from administrative methods to legis-
10 Reorganization Commission
lative and judicial practices. It publishes reports of these studies
and distributes them widely among the states, and operates gen-
erally as a clearing house for the exchange of information pre-
pared by various states.
In addition to its special studies and reports, the Council
produces various continuing publications. The Book of the States,
issued biennially, provides basic statistical data and explanatory
chapters on the organization, administration, finance and major
service functions of all the state governments in all their
branches. State Government, a monthly journal, contains articles
on numerous state problems, accomplishments, goals, and meth-
ods. The Washington Legislative Bulletin reports on develop-
ments in the nation's capital that have particular bearing on
state affairs. The Legislative Research Checklist summarizes news
of legislative organization, procedures, and services agencies, to
facilitate exchange of information among the states.
On a day-to-day basis the Council maintains an information
service that supplies to state officials and legislators, at their
request, data they need quickly in their planning and operations.
In response to state needs, the Council organizes and conducts
national and regional meetings — some on individual subjects of
immediate concern, others more general, on continuing problems
of government. At these meetings representatives of the states
share their experience and often initiate joint policies and action.
The Council also serves as a channel through which the
governments of the states consult and work with the federal
government on projects that call for such liaison.
The Council is the secretariat for America's 7,500 state legis-
lators, the Governors' Conference, the Southern Governors' Con-
ference, the Conference of Chief Justices, the National Asso-
ciation of Attorneys General, the National Association of State
Budget Officers, the National Legislative Conference, the Nation-
al Association of State Purchasing Officials, the Parole and Pro-
bation Compact Administrators' Association, the Association of
Juvenile Compact Administrators, and the National Conference
of Court Administrative Officers. The Council has a cooperative
arrangement with the National Conference of Commissioners
on Uniform State Laws and works closely with other organi-
zations serving state government.
Because of its activities for many state associations and its
day-to-day work with individual officials and legislators, the
Interstate Cooperation 11
Council is able to bring to the service of each a wide understand-
ing of the problems of all.
The states govern and control the Council through a Board
of Managers. The Board consists of forty-eight delegate mem-
bers representing the forty-eight states ; eighteen ex officio mem-
bers ; and ten Managers at Large. The Board meets annually and
at special call to consider Council policy. It has an Executive
Committee which works with the Executive Director on numer-
ous problems. The Executive Committee appoints the Executive
Director, subject to the Board's approval. He selects all members
of the Council's staff, and they operate under his direction and
supervision. The central office of the Council is in Chicago, and it
has branch offices in New York, San Francisco, and Washington.
The Council of State Governments is financed almost entirely
from contributions made by the states. Its budget for the present
year is slightly over half a million dollars. Annual state contri-
butions are based on a formula whereby each state pays $1,750
for each 500,000 of its population, based on the 1940 census.
Under this formula, North Carolina appropriates $12,500 a year
to the Council.
We believe that North Carolina receives its money's worth
for this contribution in terms of the information, service, and
assistance which are made available by the Council to our state
officials. We believe, however, that there are even greater benefits
and services which we might obtain from that organization. The
principal need in this connection seems to be for legislators and
other state officials to be made more aware of the kinds of service
and assistance which the Council of State Governments offers
them.
Other interstate organizations
In addition to the Council of State Governments, there are
several national and regional organizations which enable state
officials, through meetings and publications, to share the experi-
ence of their counterparts in all of the states. These organizations
include the national Governors' Conference, the Southern Gover-
nors' Conference, the Conference of Chief Justices, the National
Association of Attorneys General, the National Association of
State Budget Officers, the National Legislative Conference, the
National Association of State Purchasing Officials, the Parole
and Probation Compact Administrators' Association, the Asso-
ciation of Juvenile Compact Administrators, and the National
12 Reorganization Commission
Conference of Court Administrative Officers. AH of these organi-
zations are affiliates of the Council of State Governments, and
our contribution to the Council covers the costs of membership
in these affiliates.
There are, in addition to those just listed, several other asso-
ciations of state officials which serve to promote the interchange
of ideas and information among their members. Yet another im-
portant interstate agency is the National Conference of Com-
missioners on Uniform State Laws, which seeks to promote uni-
formity in state laws on subjects where uniformity seems desir-
able and practicable. North Carolina contributes $1,000 a year to
the Conference.
Interstate compacts
North Carolina is a member of four interstate compacts
through which this State joins forces with other member states
in the solution of common problems. These four compacts are
the Atlantic States Marine Fisheries Compact, the Interstate
Compact for the Supervision of Parolees and Probationers, the
Southeastern Interstate Forest Fire Protection Compact, and the
Southern Regional Education Compact. The Board of Control
for Southern Regional Education, created by the last-mentioned
compact, represents the combined effort of 16 member states to
promote the development and joint use of higher educational
facilities throughout the Southern region. Governor Luther H.
Hodges is currently the Chairman of the Board of Control, which
is made up of the Governor and four other persons appointed by
the Governor from each participating state.
The Governor is authorized by the State Civil Defense Act
to enter into mutual aid agreements or compacts with other states
and with the federal government, providing for the rendering
of various forms of assistance in the event of actual or threaten-
ed enemy attack or natural disaster. While no compacts of this
type have yet been entered into, such action is under considera-
tion.
In addition to the compacts, less formal arrangements for
interstate cooperation on particular problems are developed
from time to time. One example is the Regional Advisory Council
on Nuclear Energy, established recently by the Southern Gover-
nor's Conference to deal with various phases of the cooperative
development of atomic energy in the South.
AlWttNifi CdOPERAft&H IS
The G6vernbr*s role
The Governor is by law the sole representative of this State
in its official dealings with other states and with the federal
government. Yet the relationships of North Carolina with her
sister states and with the United States government are so num-
erous and so varied that, as a practical matter, the Governor
himself cannot serve as the point of contact in every instance.
Commission on Interstate Cooperation
The North Carolina Commission on Interstate Cooperation is
the agency through which this State participates in the work of
the Council of State Governments and encourages interstate
cooperation generally. Every state has such a commission or
some agency which performs the same function.
The North Carolina Commission dates from 1937. It consists
of the Governor, the President of the Senate, and the Speaker of
the House of Representatives as ex officio, honorary, non-voting
members, plus three component committees : the Senate Coopera-
tion Committee, composed of five Senators designated by the
President of the Senate ; the House Cooperation Committee, com-
posed of five Representatives designated by the Speaker of the
House ; and the Governor's Committee on Interstate Cooperation.
The Commission elects its own Chairman and Secretary.
The statutes which define the functions of the Commission
give it much more extensive powers than it has in fact exercised.
It is the duty of the Commission on Interstate Cooperation to
"encourage and assist the legislative, executive, administrative,
and judicial officials and employees of this State to develop and
maintain friendly contact. . . with officials and employees of
the other States, of the federal government, and of local units of
government." It may encourage cooperation between North
Carolina and other units of government by formulating proposals
for and facilitating the adoption of compacts, the enactment of
uniform or reciprocal statutes, the adoption of uniform or reci-
procal administrative rules and regulations, the informal co-
operation of governmental offices, officials, and employees with
one another, the interchange and clearance of research and in-
formation on matters of mutual concern, and by any other means
it deems suitable.
The Commission as a whole is authorized to establish com-
mittees and delegations of state officials and employees to "confer
14 Reorganization Commission
and formulate proposals concerning effective means to secure
intergovernmental harmony. . . ." Advisory boards composed
of officials, employees, and private citizens may be created to
assist the Commission in its work.
The Commission is supposed to report to the Governor and
the General Assembly at least biennially. It may employ a secre-
tary and incur other necessary expenses incident to the perform-
ance of its duties. The actual expenses of the Commission, which
are met from the Contingency and Emergency Fund, have over
the last decade ranged from nothing to $1,400 annually and have
averaged somewhat less than $500 a year. The principal outlay
has been for the travel expenses of Commission members in-
curred in attending regional and national conferences.
It is our feeling that the Commission on Interstate Coopera-
tion has a significant and useful mission to perform for the
State. We feel that the Commission should represent this State
where appropriate in conferences called to consider regional
and interstate problems in which North Carolina has an interest,
and should report its observations and conclusions thereon to
the Governor and the General Assembly.
We believe that it would be of great value to the members
of the General Assembly if the Commission would study, analyze,
and report to the legislature its recommendations with respect
to interstate compacts in which the Commission believes it
would be to North Carolina's advantage to participate, and
studies and reports made by the Council of State Governments
and similar agencies with regard to matters of concern to this
State. The Commission should refer to the appropriate state
agencies for study and analysis model legislation prepared by
the Council of State Governments; and where it is deemed ap-
propriate, the Commission should have authority to submit its
own recommendations concerning such model legislation to the
legislature. In this way our law-makers would have the benefit
of a regular channel whereby they might be systematically in-
formed of the experience of other states in coping with the mul-
tiplicity of problems which confronts all state governments.
Another activity which the Commission might undertake
is to inform legislators about the services (such as publications,
inquiry answering, and the like) which the Council of State
Governments makes available to them without charge. No doubt
there are many ways in which the Governor would be able to
Interstate Cooperation 15
make use of the counsel and services of an active and informed
Commission on Interstate Cooperation.
There are certain modifications in the organization of the
Commission on Interstate Cooperation which we think would
help to make it a more efficient working body, and at the same
time accomplish some economies. The overall size of the Com-
mission should be reduced from nineteen to a total of nine
members — three Senators designated by the President of the
Senate, three Representatives designated by the Speaker of the
House, and three state administrative officials designated by
the Governor. The Chairman should be designated by the Gover-
nor from among the legislative members of the Commission. The
Secretary ought to be chosen by the members of the Commission
from among their number.
Recommendation Wo. 1:
We recommend that the North Carolina Commission
on Interstate Cooperation study, analyze, and report to
the Governor and the General Assembly its recommenda-
tions on interstate compacts affecting the interests of
North Carolina, and on studies and reports prepared by
the Council of State Governments and similar agencies
concerning interstate matters of interest to this State;
that the Commission refer to the appropriate state agen-
cies for study model legislation prepared by the Council
of State Governments, and that where appropriate, the
Commission be authorized to submit to the Legislature
its recommendations concerning such model legislation;
that the Commission regularly inform the members of
the General Assembly and other state officials of the
publications and services which the Council of State Gov-
ernments makes available to them; that the Commission,
where appropriate, represent this State in national and
regional conferences of state officials considering inter-
state problems of concern to North Carolina and report
thereon to the Governor and General Assembly ; and that
in every other practical way the Commission assist North
Carolina to obtain the full benefits of cooperation and
exchange of information with her sister states. We fur-
ther recommend that the Commission be composed of
three Senators designated by the President of the Senate,
three Representatives designated by the Speaker of the
House of Representatives, and three administrative offi-
cials ef state government, designated by the Governor;
and that the Chairman of the Commission be designated
JW6 REdftGAttl2ATI(>N COMMISSION
by the Governor from the legislative membership of the
Commission.
Governor's Committee on Interstate Cooperation
The Governor's Committee on Interstate Cooperation is the
administrative component of the Commission on Interstate Co-
operation. It is composed of the Governor as an ex officio, non-
voting, honorary member ; the Budget Director or corresponding
official, ex officio; the chief of staff of the State Planning Board
<an obsolete office in North Carolina) or his equivalent, ex officio;
the Attorney General, ex officio; two other administrative offi-
cials of the State, designated by the Governor; and one person
who is not a state official, appointed by the Governor. The Chair-
man is designated by the Governor.
The Committee has no statutory powers or duties of its own
and carries on no activities as a committee. Apparently it exists
solely to give the non-legislative members of the Commission on
Interstate Cooperation a group label comparable to the labels
given the Senate Cooperation Committee and the House Co-
operation Committee.
It is our conclusion that the Governor's Committee has no
real purpose to serve as a separate agency of the State, and that
it might help to avoid confusion and clarify responsibility if the
Committee were abolished and the Commission on Interstate
Cooperation left as the only agency in this field. The statute
prescribing the membership of the Commission should be so
amended as to include within that group, in addition to the legis-
lative members, three administrative officials of the State to be
designated by the Governor.
Recommendation No. 2:
We recommend that the Governor's Committee on
Interstate Cooperation be abolished, and that the mem-
bership of the North Carolina Commission on Interstate
Co-operation be so revised as to include, in addition to
the legislative members, three administrative officials of
the State to be designated by the Governor.
Second Report
Turnpike Authorities in
North Carolina
June 26, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its second report, dealing
with turnpike authorities in North Carolina.
It is the sincere belief of the Commission that the adoption
of the recommendation contained in this report will be to the
advantage of the State.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. Wall
Thomas J. White
Richard G. Long, Secretary
Robert F. Morgan, Vice-Choir man
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
TURNPIKE AUTHORITIES IN
NORTH CAROLINA
Agencies Dealt With
1. North Carolina Turnpike Authority
2. Carolina-Virginia Turnpike Authority
Explanation of Findings and Recommendations
Introduction
In the years immediately following World War II, the subject
of toll roads aroused great interest throughout the United
States. Privately constructed turnpikes, financed by revenue
bonds to be retired over a long period from tolls collected from
users of the roads, seemed to many to be the most practical ans-
wer to the nation's growing need for an interstate network of
high-speed, limited-access highways. The financial success of two
early efforts in this field, the New Jersey Turnpike and the
Pennsylvania Turnpike, made this means of highway financing
all the more attractive.
North Carolina soon caught the turnpike fever, just as she
had successively contracted the canal fever, the railroad fever,
and the plank road fever which swept the country in the first
half of the nineteenth century. Legislation enacted by the Gen-
eral Assembly in 1949 authorized any group of ten or more per-
sons to file a petition with the Municipal Board of Control,
seeking permission to organize a corporation for the purpose of
constructing and operating a toll road in this State. Extensive
powers were granted to any corporation formed under this act
to construct and operate toll roads, to exercise the power of
eminent domain in acquiring rights-of-way, and to issue tax-
free revenue bonds to finance construction.
The Carolina- Virginia Coastal Highway was incorporated
under the provisions of the 1949 act for the purpose of construct-
ing a toll road along the Outer Banks from Nags Head to the
Virginia line. Before construction was begun, the State Supreme
Court declared the 1949 act unconstitutional.
20 Reorganization Commission
North Carolina Turnpike Authority
In the meantime, the North Carolina Turnpike Authority-
had been created by act of the General Assembly of 1951. The
Authority consists of the Chairman of the State Highway Com-
mission, five members of the State Highway Commission desig-
nated by the Governor, and four other persons appointed by the
Governor for four-year overlapping terms. The Authority is
granted broad powers to build and operate toll road projects any-
where in North Carolina, to exercise the power of eminent do-
main to acquire rights-of-way, and to finance construction by
the sale of tax-free revenue bonds payable solely from the tolls
pledged to their payment.
The primary objective of the North Carolina Turnpike
Authority was the construction of a 125 mile turnpike running
from near Gastonia to the Virginia line near Mount Airy. There
it was to tie in with a turnpike across southwestern Virginia,
which in turn would have connected with the West Virginia
Turnpike. However, traffic and engineering surveys made in
1952 and 1953 to determine the feasibility of and the need for
this turnpike indicated that there was not sufficient demand for
the North Carolina section of the projected turnpike to justify
the proposed investment. A legal impediment arising in 1953
blocked action on the Virginia section of the turnpike, and so the
West Virginia Turnpike was the only unit of this proposed inter-
state toll road which was actually constructed.
Carolina-Virginia Turnpike Authority
The 1953 General Assembly created the Carolina- Virginia
Turnpike Authority and gave it substantially the same organi-
zation, powers, and privileges as the North Carolina Turnpike
Authority had been given two years earlier. The chief purpose
of the Carolina-Virginia Turnpike Authority was to construct
the Outer Banks highway which had been projected by the de-
funct Carolina- Virginia Coastal Highway group. This project
did not prove feasible and so was never carried out.
Later developments
In the years since the two turnpike authorities were created
in this State, the toll road has become increasingly less attrac-
tive as a means of building an interstate highway network. This
development is attributable in part to the poor earnings record
Turnpike Authorities 21
of toll roads which have been built in areas where there was in-
sufficient user demand for the special advantages which this type
of facility offers.
Perhaps even more important in this respect has been the
approval by Congress of a $38 billion, fifteen-year program for
the construction of a 41,100 mile interstate system of multi-
lane, limited-access highways, 90% of the cost of which will be
borne by the federal government. When completed, this federal
interstate system will provide, toll-free, substantially the same
interstate highway network that was contemplated by the turn-
pike advocates.
In North Carolina, for instance, one of the projected links
of the new federal interstate system will follow much the same
route from the Charlotte area northward to the Virginia line
north of Elkin that the North Carolina Turnpike Authority had
envisioned for its toll road. With a toll-free, first class federal
highway available, there is no likelihood that a toll road along
this same route could ever pay its way.
It is the opinion of the Chairman of the State Highway
Commission and the Director of Highways that, due to the
changes in circumstances which we have discussed, there is not
now nor will there be in the foreseeable future any opportunity
for either of the North Carolina turnpike authorities to carry
out its objectives. The chairmen of both of the turnpike authori-
ties have indicated that they concur in this opinion.
Conclusions
It is the conclusion of this Commission that the need for
the North Carolina Turnpike Authority and the Carolina- Vir-
ginia Turnpike Authority has ceased to exist, and that there is
no present prospect that either of these authorities will ever be
able to carry out the purposes for which it was created. If at
some future time a change in circumstances should make the
construction of toll roads in North Carolina economically feas-
ible and desirable, we believe that the General Assembly should
be free to establish such agencies as appear, in the light of cir-
cumstances then prevailing, best suited to the purpose.
We are therefore recommending that the statutes creating
the North Carolina Turnpike Authority (G. S. 136-89.12 through
22 Reorganization Commission
89.30) and the Carolina- Virginia Turnpike Authority (G.S.
136-89.1 through 89.11h) be repealed.
Recommendation rNo. 1:
We recommend that the statutes creating the North
Carolina Turnpike Authority and the Carolina- Virginia
Turnpike Authority be repealed, and that the creation
of similar authorities in the future, if needed, be left to the
discretion of future sessions of the General Assembly act-
ing in the light of circumstances then existing.
Third Report
State Planning Agencies
June 26, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its third report, dealing
with state planning agencies in North Carolina.
It is the sincere belief of The Commission that the adoption
of the recommendation contained in this report will help to sim-
plify state government by eliminating one agency with functions
substantially duplicated by other state agencies.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. Wall
Thomas J. White
Richard G. Long, Secretary
Robert F. Morgan, Vice-chairman
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
STATE PLANNING AGENCIES
Agencies Dealt With
1. State Planning Board
2. Department of Administration
3. Division of Community Planning of the Department of Con-
servation and Development
Explanation of Findings and Recommendations
Upon examination of planning activities at the state level,
we found statutes creating three state agencies with planning
functions: the State Planning Board, the Department of Ad-
ministration, and the Division of Community Planning of the
Department of Conservation and Development.
State Planning Board
The North Carolina State Planning Board was created by
Governor J. C. B. Ehringhaus in January, 1935, in response to
a suggestion of the National Resources Board. The Planning
Board was given statutory recognition that year, and its powers
were broadened in 1937. Its main purpose was to assist in the
planning of the federal public works program as it related to
North Carolina. With the slackening of federal assistance and
of federal public works activity, the Board lapsed into inactivity
in 1940. The necessity for postwar planning caused a reactiva-
tion of the Board in 1944, and it functioned for three years
thereafter. In 1947 the Advisory Budget Commission, by a
unanimous vote, recommended that no funds be granted the
Planning Board on the grounds that its activities duplicated
those of other agencies. Since that time it has not functioned at
all. However, the act under which it operated remains on the
statute books.
The State Planning Board consists of nine members, ap-
pointed by the Governor and serving without pay. It is em-
powered to hire employees, contract with individuals and agen-
cies to perform such special services as are needed by the Board,
and call on state agencies to make special surveys and studies
26 Reorganization Commission
for the Board. It is the duty of the Board "to make studies of
any matters relating to the general development of state or
regions within the state or areas of which the state is a part,
with the general purpose of guiding and accomplishing a co-
ordinated, adjusted, and efficient development of the state." To
this end, the Board can adopt and publicize plans; furnish in-
formation to and advise the Governor, General Assembly, and
state and local governmental agencies; prepare legislation for
the effectuation of its plans; and cooperate with federal, state,
and local agencies in the accomplishment of common objectives.
Department of Administration
The Department of Administration, created in 1957, is given
certain powers and duties in the area of long-range planning of
state programs and activities. The Department is authorized
(1) to assist the Director of the Budget in the preparation of
biennial and long-range capital improvements programs for the
State; (2) to collect, analyze, and keep up to date comprehensive
information regarding basic matters such as economic and
population trends; (3) to make special studies of technological
trends, industrial location, transportation, land use, and related
matters on request of the Governor, and advise the Governor
with respect to such matters ; and (4) to assist operating agencies
on request by providing assistance and basic information needed
by such agencies in preparing their short-range and long-range
programs.
The Director of Administration, acting with the approval of
the Governor, is empowered (but not required) to establish with-
in the Department of Administration a Long-Range Planning
Division. The Director has not deemed the creation of such a
division necessary, but has instead arranged for the performance
of the long-range planning duties of the Department by existing
agencies within and outside the Department. The planning of a
long-range capital improvements program will be done by the
Budget Division and the Property Control and Construction
Division of the Department. The duty of collecting basic in-
formation and making special studies necessary to intelligent
long-range planning of State programs will be performed by
the Institute for Research in Social Science at Chapel Hill under
a contractual arrangement with the Department.
State Planning Agencies 27
Division of Community Planning
The General Assembly of 1957 authorized the Director of
Conservation and Development, acting with the approval of the
Board of Conservation and Development, to create within his
Department a Division of Community Planning. The Director of
Conservation and Development is given, and authorized to dele-
gate to a Commissioner of Planning (ex officio the Director of
Hurricane Rehabilitation), the power: (1) to provide planning
assistance to cities and other municipalities in the solution of
their local planning problems; (2) to serve as a conduit for fed-
eral and other funds for city planning assistance; (3) to provide
funds to match requested federal planning grants; (4) to coop-
erate with local, regional, and federal planning agencies and
those of other states to aid and encourage an orderly, coordinated
development of the State.
Conclusions
The State Planning Board performed useful service for the
State during the two periods of its activity, but we believe that
its usefulness is now at an end and that there is no prospect of
its reactivation.
It appears to us that in view of the rather extensive planning
powers granted by 1957 legislation to the Department of Ad-
ministration and to the Director of Conservation and Develop-
ment, adequate authority is possessed by existing and active
agencies to provide any state planning services which may be
necessary.
We therefore offer the following recommendation.
Recommendation No. 1:
We recommend that the State Planning Board be
abolished.
Fourth Report
North Carolina Utilities Commission
August 26, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its fourth report, dealing
with the membership of the North Carolina Utilities Commission
and the relationship of the Attorney General to that Commission.
We believe that the adoption of the recommendations con-
tained in this report will benefit the State by helping to insure
that the personnel serving on the Utilities Commission will con-
tinue to be of the high quality which the responsibilities borne
by that Commission demand. We also believe that our recom-
mendation with respect to the services to be performed for the
Commission by the Assistant Attorney General assigned to the
Commission will avoid any misunderstanding as to his proper
function.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. Wall
Thomas J. White
Robert F. Morgan, Vice-Chairman
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
NORTH CAROLINA UTILITIES
COMMISSION
Agencies Dealt With
1. North Carolina Utilities Commission
2. Attorney General
Explanation of Findings and Recommendations
Introduction
We have considered at length the feasibility and desirability
of reducing the membership of the North Carolina Utilities Com-
mission from five members to three members and the benefits
which the State might derive from such a reduction. Realizing
fully the importance of this agency and its heavy responsibilities
for regulating public utilities in the interest of the people of
this State, we have tried to view this question in all of its aspects.
Membership of the Commission
We began our study by examining the statutes to determine
the composition of the Utilities Commission and its predecessor
utility regulatory agencies over the years. We found that the
Railroad Commission, created by law in 1891 as this State's
first quasi-judicial utility regulatory agency, consisted of three
members elected by the General Assembly. In 1899, the Rail-
road Commission was superseded by the Corporation Commis-
sion, which was composed of three commissioners elected by the
people. The Corporation Commission was in 1933 replaced by
a single Utilities Commissioner, who was elected by the people
and had the assistance of two part-time Associate Commissioners
who were appointed by the Governor. The two part-time posts
were abolished in 1941 and the membership of the Commission
was restored to three full-time Commissioners, appointed by
the Governor with Senate approval and serving six year over-
lapping terms, one term expiring every second year. The Gen-
eral Assembly of 1949 added two more full-time Commissioners,
each appointed for a four year term. As a result of this 1949
change, each Governor now may appoint, within one month
after taking office, three of the five members of the Utilities
Commission. Senate approval is no longer required as to any
32 Reorganization Commission
of his appointees to the Commission. One of the five Commis-
sioners is designated by the Governor to serve as Chairman of
the Commission.
An examination of the membership of comparable utility
regulatory bodies in other states indicates that 36 of the states
have three-member commissions, while two have one member
only, one has four members, and only nine such agencies have
five or more members. We note that South Carolina and Georgia
are in the last category, along with North Carolina, California,
Massachusetts, and New York. All of the federal agencies with
utility regulatory responsibilities have five or more members.
Duties of the Commission
We then reviewed the extensive duties and responsibilities
which have been granted to the Utilities Commission and its
predecessor agencies over the last seven decades. We found that
the Commission is vested with "general power and control over
the public utilities and public service corporations of the State."
Included under its jurisdiction are electric power, gas, and water
companies ; carriers of freight and passengers by rail, highway,
and water ; telephone and telegraph companies ; persons or com-
panies operating public sewerage systems ; and housing authori-
ties. The scope of its jurisdiction ranges from issuance of certifi-
cates of convenience and necessity to comprehensive regulation
of rates and service, accounting systems, and issuance of se-
curities. Its authority extends to all aspects of public safety,
comfort, and convenience, and includes not only functions ex-
pressly conferred but "all such other powers and duties as may
be necessary or incident to the proper discharge of the duties of
its office." Though its domain largely ends at the state line, the
Commission has in at least one area a broader responsibility —
that of representing the interests of the State in interstate
freight rate proceedings before the Interstate Commerce Com-
mission.
While the Commission is, in one sense, a part of the judicial
machinery of the State and in this capacity hears and decides
cases, this is not the sole measure of its activities, nor is it alone
a reliable guide to the proper size of the Commission. There are
many duties performed by the Commission without a trial or
hearing, including rule-making, investigations, and controversies
over rates and services which are settled by negotiation. The
Utilities Commission 33
Commission need not await the call to action by consumers,
passengers, or shippers, but "may on its own motion and when-
ever it may be necessary in the performance of its duties, inves-
tigate and examine the condition and management of public
utilities or any particular utility." It may "inquire into [any
utility] services and rates charged therefor," and may "examine
[utility] officers, agents and employees, j . under oath or other-
wise, and compel the production of papers and the attendance
of witnesses." It may require of any utility "special reports con-
cerning any matter about which [it] is authorized to inquire,"
and exercise the powers of visitation and inspection.
Scope of the Commission's responsibility
No other quasi- judicial agency in the State has as great a
measure of responsibility as that borne by the Utilities Com-
mission. The North Carolina revenues of the 861 holders of
authority to engage in electric, gas, water, carrier, and com-
munications utilities services in this State (all of which are
regulated by the Commission) were in excess of $500,000,000
in 1957. The fixing of rates for such utility services has a greater
economic impact upon the State than does the levying of all State
taxes. Single rate cases before the Utilities Commission some-
times involve millions of dollars and affect hundreds of thous-
ands of our citizens. The achievement of proper balance be-
tween rates that are just and fair to our people and rates that
will permit our utility companies to expand their services to
supply the unprecedented demands of a vigorously growing State
that sees new industry springing up everywhere, calls for the
exercise of judgment unsurpassed in other regulatory activities
of state government.
If there were any particular number of Commission members
which would automatically produce the desired variety of train-
ing and experience and the necessary quality of judgment, it
would be only logical for us to recommend that the Commission
be composed of exactly that number of members. But we are
not persuaded that there is any magic number to be found here.
There are, on the one hand, advantages to be derived from
the wider variety of experience and viewpoint which a five-
member Commission makes possible. On the other hand, there
are even greater advantages to be gained by returning to a
three-member Commission, provided the reduction in size is ac-
34 Reorganization Commission
companied by an assurance that the Commission will continue
to be manned by first-rate personnel.
Compensation
The kind of judgment required to be exercised by members of
the Utilities Commission demands personnel of the highest order
of capability. We believe that such judgment is, to a large meas-
ure, the product of experience. It takes a member of the Com-
mission many months, or even years, to reach the point of great-
est value in the work of that body. Frequent turnover in mem-
bership causes the loss of this valuable experience and results
in a lack of the desired stability of regulation of a major element
of our economy.
We believe, then, that the best administration of our utility
regulation lies in retaining in and inducing to the service of the
Commission the necessary high quality of personnel, and not
in the number of the members. There can be no doubt that the
quality of personnel on the Utilities Commission should be no
less than that desirable for the superior court bench. And it is
equally true that compensation less than equal to superior court
judgeships will not retain or attract personnel of the required
quality. The same considerations that suggest need for providing
security and independence for superior court judges apply with
equal if not greater force to members of the Utilities Commission.
The vast public interest affected by the Utilities Commission
requires, in our opinion, that if the State is to give up the com-
posite judgment of five Commissioners, adequate provision must
be made with respect to compensation to assure retention in and
attraction to service on the Commission of personnel of the
highest order. Therefore we feel that the reduction of the Com-
mission from five to three members should be inseparably linked
with an increase in the compensation and retirement benefits
of Commission members which would put them on an equal foot-
ing with judges of the superior court in that respect.
The savings resulting from the elimination of two Commis-
sioner positions at $11,000 each would be more than sufficient to
cover the proposed increase in salary of $1,000 each for the three
remaining Commissioners and the cost of their retirement bene-
fits.
We have considered the question of whether there are other
quasi- judicial agencies of the State which are directly comparable
Utilities Commission 35
with the Utilities Commission, and for the members of which
similar provisions should be recommended as to compensation
and retirement benefits. We have concluded that the position of
the Utilities Commission is unique in the degree of public interest
involved, and therefore we are not recommending similar treat-
ment of the members of other state quasi- judicial agencies.
Independence of the Commission y
The statute establishing the membership of the Utilities Com-
mission has been carefully examined, aside from the issue of
the size of the Commission. As it is written, each Governor, near
the outset of his term, appoints three of the five members of the
Commission. In the third year of his term, he appoints a fourth
member. We feel that the quasi-judicial nature of the Utilities
Commission makes it essential that its members be as free as
possible from political obligation to the executive or legislative
branches of state government. We therefore think that the pro-
posed three Commissioners ought to serve overlapping terms
of six years each, one term expiring every second year, in order
to free the Commission of even the appearance of susceptibility
to influence by any particular Governor.
Interviews with Commissioners
Realizing that the members of the Utilities Commission are
in a better position than anyone else to know the nature and
extent of their responsibilities and work load, we discussed with
the Chairman and each of the other three Commission members
(one seat was then vacant) the ultimate question : Can a three-
member Utilities Commission carry on adequately the duties of
that agency? The Chairman and the other Commissioners express-
ed the unanimous view that, with certain adjustments in the in-
ternal procedures of the Commission (such as greater use of
hearing examiners and of hearings before individual Commis-
sioners), the work of the Commission can be performed satis-
factorily by three members, so long as the work load remains at
its present level. Should there be a significant increase in the
number of cases and other matters to be handled by the Com-
mission, they stated that three Commissioners would not be able
to perform the work of the Commission efficiently.
Conclusions
On the basis of all the evidence before us, we believe that
the membership of the Utilities Commission should be reduced
36 Reorganization Commission
from five members to three members, provided the high quality
of the Commission can be insured by making the compensation
and retirement benefits of the three remaining members equiva-
lent to those of superior court judges. We again take note of the
fact that all of the members serving on the Commission at the
time we interviewed them expressed the opinion that three mem-
bers could do the job satisfactorily, and that three-quarters of
the states have three-member commissions.
We therefore make the following recommendation.
Recommendation No. 1:
We recommend that the membership of the Utilities
Commission be reduced from five Commissioners to three
Commissioners; that the three Commissioners serve for
six-year overlapping terms, one term expiring every sec-
ond year ; and that the compensation and retirement bene-
fits of the three Commissioners be made equivalent to
those of judges of the superior court, except that the
Commissioner designated as Chairman be paid an addi-
tional $500 per year.
Retired Commissioners on emergency duty
To make full use of the invaluable experience gained through
long service on the Commission, we feel that use should be made
of retired members of the Commission in much the same manner
as retired superior court judges are assigned to emergency duty.
With the Commission reduced to three members, if a member is
ill or engaged in an extended single-Commissioner hearing, it
would be extremely helpful if the Governor, at the request of the
Chairman, were able to call in a retired Commissioner for a
designated period of emergency duty.
Therefore, we make the following recommendation.
Recommendation No. 2:
We recommend that members of the Utilities Com-
mission who have retired pursuant to the provisions of
our Recommendation No. 1, be subject to assignment by
the Governor, at the request of the Chairman of the Com-
mission, for designated periods of emergency duty on the
Commission; and that during such periods of emergency
duty a recalled Commissioner have all the powers of a
regular Commissioner.
Relationship of Attorney General to Utilities Commission
G. S. 62-10.2 provides that the Attorney General shall appoint
Utilities Commission 37
an additional Assistant Attorney General who shall be assigned
to the Utilities Commission, shall be under the direction of the
Attorney General, and shall perform such legal services as may
be necessary in connection with the duties of the Commission.
The Attorney General may also require this Assistant to perform
such other legal duties as may be determined by him.
G. S. 62-21 provides that the Attorney General shall, in cases
in which in his opinion the public interest so requires, or upon
the request of the Governor or of the Utilities Commission, at-
tend or assign an Assistant to attend any hearing before the
Commission or an examiner and conduct the examination of
witnesses and otherwise participate in the hearing on behalf of
the State.
It is to be noted from Section 62-10.2 that the Assistant At-
torney General assigned to the Utilities Commission remains
under the direction of the Attorney General and may be assigned
by him to other duties than those relating to the Utilities Com-
mission. It has been the understanding of the Utilities Commis-
sion that these provisions in the law make it necessary for the
Commission to co-ordinate with the Attorney General its use
of the Assistant Attorney General assigned to the Commission,
in order to make certain that any request of the Commission
conforms to the "direction of the Attorney General" and does
not conflict in point of time with other duties assigned to the
Assistant Attorney General by the Attorney General.
In addition, there have been numerous instances in which the
Attorney General has actively participated in rate proceedings
and other cases before the Utilities Commission either as a pro-
testant or in alignment with parties having a definite inter-
est in such proceedings. While the Attorney General or his
Assistant are so engaged before the Commission, the Com-
mission has found it awkward to call upon the Assistant Attorney
General assigned to it for legal assistance.
G. S. 62-26.12 makes it entirely clear that the Utilities Com-
mission itself may appeal from the judgment of the superior
court to the Supreme Court in a case involving one of its orders.
Thus, it is conceivable that the Attorney General might intervene
in a proceeding under G. S. 62-21 which would ultimately be
reviewed in the superior court, and from the judgment of the
superior court the Commission might desire to appeal to the
38 Reorganization Commission
Supreme Court on a point at which it would be in conflict with
the position already taken by the Attorney General.
The authority of the Attorney General contained in G. S.
62-21 has a wholesome purpose which is directly related to the
public interest, and it would not seem feasible to undertake to
circumscribe the exercise of the discretion now vested in the
Attorney General. There appears to be no way to remedy the
conflict by further defining the circumstances under which the
Attorney General may intervene in certain cases before the Com-
mission. Nevertheless, the conflict appears to be to some extent
a hindrance to the Commission in the full use of a facility ob-
viously intended by the General Assembly to be made available
to the Commission without such hindrance.
If our recommendation that the membership of the Utilities
Commission be reduced from five to three is accepted, it is also
reasonable to assume that the demands upon counsel for the
Commission will increase in the future. A review of the organi-
zation of utility regulatory bodies in other states indicates that
31 such commissions have their own staff counsel independent
of the Attorneys General of the respective states. Eighteen com-
missioners use a member of the Attorney General's staff as com-
mission counsel and six commissions have no specific arrange-
ment for counsel.
We have considered the possibility that independent staff
counsel, responsible directly and only to the Utilities Commission,
might offer an answer to the problem which we have described.
As a result of discussions with the Attorney General and with
members of the Utilities Commission, however, we have con-
cluded that these difficulties, both actual and potential, can be
effectively and more conveniently dealt with by revising G. S.
62-10.2 to make clear that the Commission can call on the As-
sistant Attorney General assigned to it for legal research, draft-
ing, advice, appearances, and such other assistance as the Com-
mission may require.
The Attorney General has assured us that every effort will
be made to see that no conflict in obligation on the part of his
Assistant assigned to the Commission actually arises. He has
further stated that if the burden of work should require it, he
will assign one or more of his staff attorneys to give the Com-
mission additional assistance.
Utilities Commission 39
This arrangement appears to be satisfactory to the Utilities
Commission members, and therefore we make the following
recommendation.
Recommendation No. 3:
We recommend that the statute authorizing the At-
torney General to assign an Assistant Attorney General
to the Utilities Commission he amended to make clear
that that Assistant is available to the Commission for such
legal research, drafting, advice, and appearances, as the
Commission may direct.
Fifth Report
State Legislative Building
September 24, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its fifth report, recom-
mending the construction of a new building to house the General
Assembly of North Carolina.
We are firmly convinced that such a building is needed, that
it is needed now, and that the benefits to be gained from it will
be shared not only by the members of future General Assemblies
who will use it, but by all the people of the State. For these
reasons we strongly urge its adoption by the General Assembly
of 1959.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. Wall
Thomas J. White
Robert F. Morgan, Vice-Chairman
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
STATE LEGISLATIVE BUILDING
Explanation of Findings and Recommendations
Introduction
The first study undertaken by this Commission concerned
the need for a new building in which to transact the legislative
business of North Carolina. Having all served in the General
Assembly for a collective total of thirty-three terms, we have
some personal knowledge of the need for such a building. This
knowledge has been reinforced by the information which we
have gathered in the course of our study. Neither in the public
hearing which we held on this subject, nor in newspaper com-
ments which have been made since it was announced that this
subject was under consideration, nor elsewhere, have we heard
or seen any disagreement with the proposition that North Caro-
lina needs a new legislative building and needs it now.
The present Capitol
The City of Raleigh was laid out in 1792 as the capital of
North Carolina. That same year, construction was begun on the
small and unpretentious State House which for several years
housed all of state government. Enlarged and renovated in the
early 1820's to provide improved accommodations for the General
Assembly and the state officers, the State House was burned in
1831.
The following year a small appropriation was made to begin
construction of a new Capitol. As in 1792, the supervision of the
work was entrusted to a commission created and appointed by
the General Assembly. While some of the legislators of the time
would doubtless have been content to see the new Capitol built
as cheaply and simply as the old State House had been, the build-
ing commission had a larger conception of its task.
To design the Capitol the commission engaged the best archi-
tectural firm in the country, and to execute it they brought in
skilled workmen and artisans from outside the State. Con-
scious that they were not putting up an ordinary building to last
but a few years, they approved a design in the finest and most
44 Reorganization Commission
"modern" style of their day, and they spared no expense in as-
suring that the people of the State got a Capitol which would, in
the words of the commissioners, "remain for Centuries, an ob-
ject of just and becoming pride, as a noble monument to the
taste and liberality of the present generation."
The Capitol with its furnishings ultimately cost over $530,-
000 — nearly three times the ordinary state expenditures for
the fiscal year 1840-41, the year of its completion. Of course there
was grumbling during construction about the alleged extrava-
gance of the commissioners, but as one native historian has ob-
served, "no public building, in any way a credit to the State,
has ever been erected in North Carolina without bringing down
denunciations upon those responsible for it." Yet by the time it
was dedicated, the grumbling had ceased and the Capitol had come
to be generally recognized as a credit to the State and her
people, and as the finest state capitol of the time.
Through more than a century of use, the Capitol, in its solid
integrity, has come to be the symbol of our state government
itself. We share with critics more learned than ourselves the
opinion that our Capitol is a splendid specimen of the architectur-
al taste and building art of its time.
Let it be clearly understood that we are convinced that the
Capitol and Union Square should be left intact and unaltered, no
matter what provision may be made elsewhere for improved
legislative quarters. At a time when over three million dollars in
private and public funds are being spent to rebuild the palace of
a royal governor, it would be unthinkable to permit the desecra-
tion of a building which has for over a century sheltered the
elected representatives of a free people.
Furthermore, we think that even after new legislative cham-
bers are built, all future sessions of the General Assembly should
convene and adjourn their sessions in its historic home, and so
fulfill in spiritual continuity the hope voiced by Governor John
Motley Morehead in addressing the first General Assembly to
convene in the Capitol : "may a thousand years find these Halls
still occupied by Freemen, legislating for a free and happy
people."
The changing times
With due reverence for the Capitol as a shrine of democracy,
we believe that it has outlived its adequacy as the working center
State Legislative Building 45
of state government. When the Capitol was dedicated in 1840,
North Carolina had a population of about 750,000 ; today she has
nearly 4,500,000 residents. The annual state expenditures for all
purposes were then $214,000 a year; today we spend almost
$600,000,000 each year. When the Capitol was opened for uses
it easily housed all of the state officers and employees in the
capital city, for exclusive of the General Assembly and its staff
they did not exceed a total of 15 people. Today it is estimated that
there are working in the Raleigh agencies alone (excluding the
state institutions located in the city) more than 3,700 people.
The General Assembly is the only agency of state government
which is the same size today as in 1840 — 50 Senators and 120
Representatives. Yet the General Assembly has grown too, in
its own way. The session of 1840-41 employed 11 clerks and
doorkeepers, stayed in session eight weeks, passed 121 acts, and
cost the State $37,000. The 1957 session employed about 200
people, stayed in session 18 weeks, passed 1455 acts, and cost
$850,000. The number of standing legislative committees has
grown in that period from a mere handful to 77. The number of
citizens visiting the General Assembly from all over the State
has multiplied with improved transportation and more wide-
spread public interest in the work of government. The lone re-
porter with a pencil has given way to a host of newspaper, radio,
and television representatives with increasingly elaborate equip-
ment.
In short, North Carolina, her people, her wealth, her govern-
ment, and the business of her legislature have all grown en-
ormously in 118 years, but the facilities provided for the exclusive
use of her legislative representatives are almost exactly the
same as they were in 1840. As the other agencies and departments
of state government have grown, additional buildings have been
provided to house them until today we have in Raleigh, in addi-
tion to the Capitol, 19 office buildings and related structures,
valued at over $21,000,000 (without furnishings) , and containing
well over a million square feet of floor space. Now there are
left in the Capitol (in addition to the General Assembly) only
the Governor and his staff, the Secretary of State and part of
his staff, and the State Treasurer and part of his staff— a total of
about 30 full-time employees.
46 Reorganization Commission
Deficiencies of the Capitol
The 170 members, 77 committees, and nearly 200 employees
of the General Assembly need and deserve adequate working
space and facilities. They do not have them.
The two legislative chambers themselves are crowded and
cramped, and do not afford sufficient space for legislators, clerks,
reporters, pages, and others who have to work there.
With the exception of the presiding officers and the chair-
men of four or five of the busiest legislative committees, there
are no office facilities at all for legislators. If a member has
occasion to confer with a colleague or constituent, to write a
letter, or to carry on any other official business, he must do
it at his desk amid the bustle of the legislative chambers or in
crowded lobbies or corridors.
The presiding officers of the two houses do not even have
private offices. Each must share his small office (about 140
square feet each) with a secretary, and he has no place to hold
necessary conferences with groups of legislators and other
officials. Each of the principal clerks of the two houses must
carry on much of his or her work in an office of about 140 square
feet which is shared with three or four other clerks, and where
he or she is subject to constant interruption and distraction.
The total office space available to the 60 clerical employees
of the House of Representatives is about 900 square feet, or 15
square feet per person. There is available to the 42 Senate clerical
employees a total of about 1200 square feet of office space, or
about 29 square feet per person.
Nearly 30 House committee clerks must work in a room 21
by 33 feet, while the 15 Senate committee clerks occupy a room
of similar size. (Both of these rooms also serve as permanent
repositories for some of the State's most valuable public records,
the original enrolled acts and journals of the legislature for the
last 200 years, and for records of the Secretary of State's office.)
The House engrossing office and stenographic pool, where
some 15 people worked, were until recently quartered in a room
containing about 160 square feet; now that room houses only air
conditioning equipment.
The four House disbursing clerks and index clerks must
work in a corner of the House lobby. Neither sergeant at arms
has a desk at which to work. The printed bills office is kept
in a small third floor room which is also a passageway to the
State Legislative Building 47
Senate galleries. The enrolling office is housed in the State
Library Building.
There is no place for the pages, doorkeepers, and porters
(numbering 40 or more in the House and about 33 in the Senate)
to stay except in the chambers of the two houses, whether be-
fore, during, or after the daily sessions.
No cloak-room facilities are or can be provided for the em-
ployees of the two houses, and those for members are make-
shift affairs situated in a lobby and a hallway. Existing restroom
facilities for members and employees would be entirely in-
sufficient even if they did not also have to serve the many
hundreds of visitors who come to the Capitol daily during the
sessions. Small closets offer the only storage space for stationery
and supplies for the two houses.
Press facilities on the floor of the two chambers are cramped
and very inadequate. The only place in the Capitol for news-
men to work and keep their equipment — typewriters, teletype
machines, and the like — is an office containing about 100 square
feet and about the same amount of space at the end of an open
public corridor.
It would be impractical to house any significant number of
legislative employees in office space removed from the Capitol,
even if such space were available for them, for the obvious
reason that their usefulness depends on their ready availability
to the legislators and to the principal clerks.
It is highly unlikely that much better use could be made of
the working space available to the General Assembly within
the Capitol. The only answer lies in the complete removal of the
legislative apparatus to new quarters, designed and built with
a view to the needs of the General Assembly of today and the
future.
Much of the efficiency of operation of the General Assembly
depends in turn on the efficient operation of the legislative com-
mittee system. In 1957, there were 48 committees of the House
and 29 committees of the Senate. They range in size up to 60
members each, and individual legislators often serve on as
many as ten to fifteen committees. The busier committees must
meet two or three times a week.
There are no committee rooms set aside for the sole use of
the General Assembly. Efforts have been made from time to
48 Reorganization Commission
time, as new state office buildings have been built, to reserve
space therein for the exclusive use of the legislative committees.
The needs of the administrative agencies inevitably have taken
priority, however, and the reserved space has been given over
to offices.
During legislative sessions, about ten rooms of various sizes
are diverted from their regular uses and made available as
meeting rooms for committees of the General Assembly. These
rooms are scattered among the several state buildings. It re-
quires much juggling of committee schedules to get maximum
use out of available meeting rooms. Valuable time is lost by
legislators who must walk considerable distances, in all kinds
of weather, to get to several committee meetings in the course
of a single morning. As has already been noted, only four or
five of the committee chairmen have any office space in which
to work, and this they must share with their committee clerks.
The rest of the chairmen have no office facilities at all, and their
clerks must share a single office with 15 to 30 other clerks.
As many as 2,000 school children visit the Capitol each day
during the legislative sessions, in addition to many other citizens
who come to see their representatives at work. Yet these visitors
cannot be accommodated in anything like the manner they de-
serve. The public galleries are small and cramped, and the al-
most constant entry and exit of large numbers of spectators,
however welcome they may be, is distracting to the legislators
who are trying to give serious attention to the state's legislative
business.
The 1957 session of the General Assembly lasted for 109 days
and cost the State about $850,000 — an average cost of $7,800
per legislative day. Since legislative members and employees
are paid by the day, any reduction in the length of sessions
would result in a direct saving to the State. To what extent
recent sessions might have been shortened through the greater
efficiency which adequate working facilities would have made
possible is a speculative matter. Yet it is obvious to us that some
time could have been saved, and at $7,800 per day, the shortening
of sessions by even a few days would produce substantial savings
to the State. If the experience of the past few years is a re-
liable guide, it is probable that regular legislative sessions will
continue to lengthen because of the increasing number and com-
State Legislative Building 49
plexity of problems which must be dealt with by the General
Assembly. Any means which can have the result of limiting this
gradual increase in the length of legislative sessions by getting
the legislative work done in less time deserves serious considera-
tion. We would not suggest that a new legislative building is
justified solely on the ground of economies which might re-
sult from it; however, we believe that this is one factor
which should not be overlooked in evaluating the benefits to be
derived from a new building.
The needs of today
We are firmly convinced that North Carolina needs and
should erect a new building to house the General Assembly
and all of its activities. While exact specifications of what such
a building should contain must await more detailed and ex-
pert study than this Commission can give the subject, we
would offer these thoughts on that point, based on our own
experience and observations as legislators.
The first requirement is adequate and comfortable chambers
for the Senate and House of Representatives. They should be
large enough to accommodate the members, clerks, employees,
representatives of the press and other news media, and others
who must in the ordinary course of business occupy the cham-
bers. The chambers should be air conditioned, and should be
equipped with public address systems, electric roll call de-
vices, and such other equipment as will expedite legislative
proceedings. There should be commodious public galleries, so
designed that the public can gain access, view the legislative
proceedings, and leave, all with a minimum of disturbance to
legislators and employees at work in the chambers or elsewhere
in the building.
Sufficient office space should be provided for the presiding
officers of the two houses and their secretaries, the principal
clerks, and the chairmen and clerks of at least the busier stand-
ing committees. Typing pools should be included for clerical
personnel of the two Houses. Some provisions should be made
for office space for legislators — perhaps not an individual office
for each member, but at least such arrangement as will enable
a legislator to have a little privacy when he needs to confer
with visiting constituents, to dictate letters, and to handle other
official business.
50 Reorganization Commission
Within the legislative building itself there should be com-
mittee rooms of various sizes and sufficient in number to
permit maximum working efficiency on the part of the legisla-
tive committees.
There should be appropriate facilities for the press and other
news media and their equipment. As to offices of non-legislative
agencies which might be located in the building, consideration
should be given first to those agencies and services (such as
the enrolling office of the Secretary of State and the legislative
drafting division of the Department of Justice) which there
is some special reason for having near the center of legisla-
tive activity.
The legislative building should be so designed as to permit its
enlargement or the construction of additional closely related
buildings, in order to permit expansion to accommodate future
growth.
While the legislative building and facilities which we are
proposing are intended primarily for use during the four to
five month biennial legislative sessions, this does not mean that
they will remain idle during the remainder of the time. The
meeting rooms and other facilities would be available for use
by the various interim study commissions of the General As-
sembly and by other agencies and groups which have occasion
to meet in the capital city.
These are some of the particular needs which a state legisla-
tive building must meet. Moreover, we would not overlook the
rare opportunity which the erection of this building offers to
serve a larger purpose than the mere sheltering of governmental
activities. This building will represent North Carolina, not
only to our own people but to visitors who come to this State.
In its design, its materials, its furnishings, and its decorations,
the state legislative building should bespeak the character,
the genius, the history, and the resources of our State and her
people.
Recommendation No. 1:
We recommend that the General Assembly of 1959 au-
thorize the immediate construction of a state legislative
building to house the General Assembly, its officers, mem-
bers, committees, employees, and related services and
activities.
State Legislative Building 51
The coat
We believe in economy in state government. We are con-
vinced, however, that this is one instance when true economy
calls for large vision and for the willing expenditure of what-
ever sum it requires to give North Carolina a legislative build-
ing which will be in every way suitable to the needs and
worthy of the pride of our State and her people. In erecting a
building of this kind, it must be remembered that it is to endure
and serve for generations, and that future generations will be
benefitted or handicapped, according to the wisdom or the
short-sightedness which guides the builders. It is due to the
foresightedness and courage of the men who planned and built
the present Capitol, and it is no less due to what their con-
temporaries decried as their "extravagance", that the Capitol
which they erected has served the State for well over a century.
Based upon the evidence at hand and general information,
but without having had the benefit of technical advice from
architects, it is our present view that a legislative building
approaching the kind and character which we have described
can be built for $7,000,000. It is our view also that at least
$7,000,000 should be provided for this undertaking in the first
instance. We feel that the best talent and skill available should be
used in the planning and execution of the building, and that
there should be no sacrifice of quality in either design or con-
struction. The financial authorities of the State have indicated
to us that bonds in excess of $7,000,000 may be issued during
the next biennium on authority of the General Assembly and
without a vote of the people. Because of the nature of the
investment, we think it proper that the cost of a new legislative
building and its site be provided by the sale of state bonds in the
necessary amount. To provide the amount mentioned would not
mean that the whole of such amount would have to be spent,
if, upon closer examination, it should appear to those responsible
for planning and erecting the building that a structure of ac-
ceptable character could be built for a smaller sum.
Recommendation No. 2:
We recommend that the General Assembly of 1959 au-
thorize the issuance of state bonds in at least the sum
of $7,000,000, the proceeds to be used to acquire a suit-
able site and to erect thereon a state legislative building.
52 Reorganization Commission
The site
We believe that the selection of a site for the legislative build-
ing should be left to the judgment of a Legislative Building
Commission, the creation of which is hereinafter recommended.
In this connection, however, we respectfully submit that, in
our opinion, the building should be located with due consideration
to the location of the present Capitol and the state buildings
in its vicinity, and with a view to the construction of other
state buildings in the future. Consideration should, in our
opinion, be given to the acquisition of ample land on which to
construct possible additions to the new legislative building or
other buildings which in the future would be necessary to com-
plement it, the site for all of which should be such as to lend it-
self to stately beautification and spaciousness consonant with
the character, integrity, and generosity of the people of North
Carolina.
Supervision
Because of the special nature of the building which is being-
proposed, we think a special Legislative Building Commission
should be created and given responsibility for the selection and
acquisition of a site, the employment of architects, the develop-
ment and approval of plans for the building, the letting of
contracts, and the general supervision of the execution of the
work. This Commission would have available to it the personnel
of the Department of Administration for assistance in the
technical phases of its duties, in addition to such outside as-
sistance as the Commission might see fit to employ.
The principal, if not the sole, purpose of this building will
be to serve the General Assembly. For that reason, we think
it desirable that a majority of the members of the Commission
be persons with legislative experience, who know the special needs
of the General Assembly, and who can bring that knowledge to
bear in the selection of a site and the development and approval
of building plans. There should also be on the Commission re-
presentatives from the public at large.
Recommendation No. 3:
We recommend that the selection of a site, the de-
velopment and approval of building plans, the letting of
contracts, and the overall supervision of construction of
State Legislative Building 53
the state legislative building be entrusted to a special
Legislative Building Commission. We further recommend
that this Commission consist of two persons who have
served in the Senate, appointed by the President of the
Senate; two persons who have served in the House of
Representatives, appointed by the Speaker of the House
of Representatives; and three persons appointed by the
Governor; and that all members serve for the duration
of the undertaking.
The objective
It is our hope that those who are charged with the duty of
planning and constructing the legislative building will keep
constantly in mind the true nature of their task. This will not
be just another office building, to be put up as cheaply and as
quickly as possible, and then forgotten. It will, for a long time to
come, be the center of state government and the focus of popular
interest in that government, and therefore it should be a building
which will do honor to the State both today and in the future.
We cannot know what progress in architectural design or
changes in legislative needs time may bring; nothing can be
built today with the assurance that it will be adequate to the
needs of another century or even of another generation. The
least and the most we can do is to adopt today the same high
standards which guided the commissioners of 1833-40 in building
the present Capitol, and strive to create a building which will
long be recognized as an "object of just and becoming pride,
as a noble monument to the taste and liberality of the present
generation."
Sixth Report
Succession to State ExecutiveOffices
and Disability of Officers
October 17, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its sixth report, dealing
with succession to statutory offices in the executive branch of
state government and the determination of disability on the
part of those officers. We are offering no recommendations on
these matters with respect to the constitutional state officers,
since it is our thought that such recommendations might more
appropriately come from the North Carolina Constitutional
Commission.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. WALL
Thomas J. White
Robert F. Morgan, Vice-chairman
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
SUCCESSION TO STATE EXECUTIVE
OFFICES AND DISABILITY OF OFFICERS
Officers Dealt With
1. Elected state executive officers
2. Administrative officers appointed by the Governor
3. Administrative officers selected by other methods
Explanation of Findings and Recommendations
Introduction
It is essential to the continuity and stability of government
that the functions of public offices shall not go unperformed
for lack of public officers to perform them. To insure that this
objective is attained, it is necessary that there be effective pro-
vision made by the Constitution or by statute for (1) the ex-
peditious filling of all vacancies in office, (2) the performance
of the duties of every office during the absence or disability of
the regular holder of the office, and (3) the determination of
the existence and the cessation of mental or physical disability
or incapacity on the part of any officer to perform the duties of
his office.
With these propositions in mind, we have examined the
constitutional and statutory provisions governing these matters
as they relate to (1) the Governor, the Lieutenant-Governor,
the Secretary of State, Auditor, Treasurer, Superintendent of
Public Instruction, Attorney General, Commissioner of Agri-
culture, Commissioner of Labor, and Commissioner of Insur-
ance; (2) the administrative officers appointed by the Gover-
nor; and (3) the administrative officers chosen by other methods.
Each of these three categories of officers is discussed sep-
arately in this report because of the differences in the constitu-
tional and political character of each of the categories. Within
each of the latter two categories we have, for the purpose of
discussion, dealt separately with two somewhat interrelated
issues, succession to office and the determination of the existence
and cessation of disability on the part of the officer or officers
in the category.
58 Reorganization Commission
The increasing complexity, tempo, and strain of life, and
particularly the life of the public official, give this subject much
greater significance than it had in quieter days. In addition to
the normal hazards of life, civil defense officials warn of the
possibility of enemy attack in which some state officials, along
with large numbers of citizens, might be killed or incapacitated —
a circumstance under which it would be particularly impor-
tant that the procedures for filling vacancies in office and for
carrying on the duties of vital state offices be clear and effective,
in order that there might be no interruption of essential state
governmental activities due to uncertainty of command.
ELECTED STATE EXECUTIVE OFFICERS
We have devoted considerable time and study to the issues
of succession to office and the determination of disability as they
relate to the Governor, the Lieutenant-Governor, and the other
eight elected state executive officers. We have concluded that
any changes with respect to those officers ought to take the
form of constitutional amendments. Since the North Carolina
Constitutional Commission was created by the General Assem-
bly of 1957 for the specific purpose of proposing such changes
in our State Constitution as it might find necessary, we think it
proper that any proposals for alteration in the order of suc-
cession to the constitutional offices or in the mode of determin-
ing the disability of the constitutional officers should come
from that Commission. Accordingly, we have passed our sugges-
tions on to the Constitutional Commission for its consideration,
and we are confident that that Commission will present to the
General Assembly appropriate recommendations on the subject.
We are therefore restricting this report to those aspects of the
problems of succession and disability determination which are
within the reach of statutory remedy.
OFFICERS APPOINTED BY THE GOVERNOR
Succession to office
The Governor appoints many of the more important officers
of the executive branch of state government who are not elected
by the people. Some of the Governor's appointees serve at his
pleasure; others are appointed for a fixed term of years. In
all instances, however, the Governor is authorized to appoint to
Succession to State Offices 59
fill vacancies occurring in any office to which he has the power
to make the regular appointment.
Like the elected state executive officers, the officers appointed
by the Governor can apply for and obtain leave of absence for
military duty, protracted illness, "or other reason satisfactory
to the Governor,' ' and the Governor is authorized to appoint an
acting or substitute officer to perform the duties of the officer
on leave.
While the provisions for filling vacancies in offices to which
the Governor appoints and for granting leaves of absence to
his appointees appear to be adequate to the purposes they were
designed to serve, there remains a need for some means of
designating acting or interim officers to serve during vacancies
in office and pending the appointment of a "permanent" suc-
cessor, and to serve during the extended absence or disability
of an appointive officer. Frequently the statutes creating a
state office will assign duties to be performed by the officer
personally, so that during a vacancy in the office, its duties
cannot be performed. The Governor should be able to take
whatever time is necessary to find the best qualified person
available to fill a vacancy in one of these offices, free of the
pressure to take immediate action in order to keep the work of
the office involved from being completely stalled. Some provision
should also also be made for the performance of the duties of
an appointive officer when that officer is physically or mentally
incapacitated or otherwise unable to ask for a leave of absence.
Where an officer serves at the Governor's pleasure he can, of
course, be summarily removed and a replacement appointed,
but such drastic action might not be desirable in some instances.
Inasmuch as the Governor is authorized by law to appoint tc
fill vacancies in all of the offices under discussion here, it would
seem only logical that he is the proper authority to designate
the acting holders of such offices.
Recommendation No. 1:
We recommend that the Governor be empowered by
statute to appoint an acting officer to perform the
duties of any state officer who is regularly appointed
by the Governor, such acting officer to serve ( 1 ) in the
interval between the occurrence of a vacancy in office
60 Reorganization Commission
and the appointment by the Governor and qualification
of a person to fill such vacancy, (2) during the con-
tinued absence of the regular office holder, and (3)
during the physical or mental incapacity of the regular
office holder.
Disability of officers
Since he is entrusted with the responsibility for appointing
all of the officers in this category, we think it logical that the
Governor be granted by statute the authority to determine the
existence and the cessation of physical or mental incapacity
on the part of the officers whom he regularly appoints.
Recommendation No. 2:
We recommend that the Governor be authorized by
statute to determine the existence (and the cessation)
of physical or mental incapacity on the part of an of-
ficer whom he regularly appoints to perform the duties
of his office.
OFFICERS SELECTED BY OTHER METHODS
Succession to office
The executive heads of several state agencies, such as the
Director of Prisons, the Director of Highways, and the State
Health Director, are appointed by some agency other than the
Governor. In all instances, there seems to be adequate authority
(either express or implied) for filling vacancies in these offices
by action of the board or other agency authorized to make the
regular appointment. The leave of absence provisions previously
mentioned are also available to these officers, and the Governor
may appoint a substitute to act in the place of the officer on
leave, even though the Governor does not have the power to
make the original appointment to the office.
As is true of the appointed officers whom we have discussed,
and for substantially the same reason, we believe that there is
a need here for some means of designating an acting or interim
officer to serve during a vacancy in office and pending the fill-
ing of such vacancy, and also to serve during the incapacity of
an officer. Since the power to appoint the holder of each of these
offices and to fill vacancies occurring therein has in each in-
Succession to State Offices 61
stance been granted by law to a particular board or commis-
sion which can be presumed to have some special knowledge
of the qualifications demanded by the position involved, we
think the power to designate an acting officer under ordinary
circumstances should also be entrusted to the board or com-
mission responsible for making the original appointment to the
office involved.
On the other hand, we recognize the fact that under certain
extraordinary circumstances, such as those attendant upon an
enemy atack upon the United States, it might be necessary to
appoint an acting officer to fill a vacancy in one of these posts,
and to do so quickly. To assemble the scattered members of a
numerous board or commission to make an emergency appoint-
ment would be especially difficult under such conditions, for
communication and transportation might well be disrupted for
some time. For these reasons we think it desirable to vest in the
Governor the power to appoint an acting officer to fill temporarily
a vacancy occurring in one of these offices, but to do so only
(1) in the event of a declaration of war by the Congress of
the United States, or (2) when the Governor and Council of
State acting together shall find that there is imminent danger
of hostile attack upon the State of North Carolina. An acting
officer appointed by the Governor under this authorization
would, of course, serve only until the board or commission re-
sponsible for the regular filling of that position meets and exer-
cises its power either to designate an acting officer, or to ap-
point a person to fill the office for the unexpired term.
Recommendation No. 3:
We recommend that each of the boards and com-
missions now empowered by law to appoint the execu-
tive head of a state agency be likewise empowered to
appoint an acting officer to perform the duties of the
executive head of that agency (1) in the interval be-
tween the occurrence of a vacancy in office and the
appointment by the appropriate authority and qualifi-
cation of a person to fill such vacancy, (2) during the
continued absence of the regularly appointed officer,
and (3) during the physical or mental incapacity of the
regularly appointed officer.
62 Reorganization Commission
Recommendation 'No. 4:
We further recommend that the Governor be em-
powered, in the event of a declaration of war by the
Congress of the United States or when the Governor and
Council of State acting together shall find that there is
imminent danger of hostile attack upon the State of
North Carolina, to appoint an acting officer to fill a
vacancy in one of the above-mentioned offices (1) in
the interval between the occurrence of a vacancy in
office and the appointment by the appropriate au-
thority and qualification of a person to fill such
vacancy, (2) during the continued absence of the re-
gularly appointed officer, and (3) during the physical
or mental incapacity of the regularly appointed officer.
Disability of officers
We believe that the respective authorities empowered to
make appointments to this class of offices in case of vacancy or
disability are the appropriate authorities to make findings of
incapacity, or the restoration of capacity, on the part of these
officers.
Recommendation No. 5:
We recommend that the authorities which would,
under our Recommendations No. 3 and 4 be authorized
to appoint acting executive heads of certain state
agencies to serve during the physical or mental in-
capacity of the regularly appointed officer, be further
empowered to make findings of the existence (and the
cessation) of physical or mental incapacity on the part
of such officers to perform the duties of their offices.
Sevetnh Report
Public Records Management
November 21, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its seventh report, deal-
ing with state public records management problems and pro-
grams.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. WALL
Thomas J. White
Robert F. Morgan, Vice-Chairman
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
PUBLIC RECORDS MANAGEMENT
Agencies Dealt With
1. State Department of Archives and History
2. General Services Division
Explanation of Findings and Recommendations
Introduction
Public records in large quantity are an inevitable and essen-
tial by-product of modern governmental activity. The quantity
and variety of public records seem destined to increase in step
with growth in the number, size, and range of concern of gov-
ernmental agencies and programs at every level.
One result has been that more and more space in costly office
buildings has been taken up by filing cabinets and other records
storage equipment. A large part of these records are necessary
to the day-to-day operation of any agency and so must be kept
close at hand for frequent reference. Yet unless there is a
systematic clearing out of seldom-used and obsolete records,
much space must inevitably be wasted in their storage and the
efficiency of the agency hampered in consequence.
This Commission's interest in the matter of public records
management stems from our examination of present and fu-
ture needs for increased office space for Raleigh agencies —
needs in part produced by the pressure for more space to house
records created or received by those agencies. We therefore
determined to find out what is being done, and what can be
done, to alleviate the state records storage problem in Raleigh
by less expensive means than the construction of new office build-
ings.
State Department of Archives and History
Our attention turned first to the official archival agency of
the State, the Department of Archives and History. Created in
1903, the Department has during most of its career in the
records field been chiefly concerned with collecting, arranging,
and making available to the public both public and private
66 Reorganization Commission
records which are deemed worthy of permanent preservation
for the light they shed on the history of our State and its peo-
ple. Public officials are authorized by law to turn over to the
Department public records "no longer in current official use/'
In 1935, the responsibilities of the Department were broadened
to include the duty of advising and assisting all public officials
in connection with their problems of preserving, filing, and mak-
ing available to the public the records in their custody. At the
same time, public officials were forbidden to destroy any public
record without the approval of the Department. It should be
noted that these responsibilities of the Department extend not
only to state officials and their records, but to city and
county officials and their records as well.
Records management program
The State Department of Archives and History has in recent
years, and particularly since 1953, conducted an increasingly
active records management program in cooperation with the
state agencies in Raleigh. This program has two objectives:
(1) to move records which are no longer frequently used out
of valuable downtown office space, while keeping them avail-
able as long as necessary for administrative use; and (2) to
insure the permanent preservation of only such records as it
appears will have continuing value for research or reference.
The Department has two record storage facilities. One con-
sists of the fireproof Archives facilities in the Education Build-
ing, where are deposited all records intended to be kept perma-
nently. The other is the fireproof Records Center near Cas-
well Square in Raleigh, which we inspected in the course of our
study of the records management program. This Center was
opened in 1953 and consists of the 18,000 square foot second
floor of a brick and concrete warehouse-type building. (The
first floor of the building is used by the Department of Public
Instruction as a storage and distribution center for public school
textbooks.) The Records Center is used for the storage and
processing of semi-current records of state agencies pending
their destruction or transfer to the Archives for permanent
preservation. At present there are about 7,000 cubic feet of
records in the Archives and about 18,000 cubic feet of records
in the Records Center.
Public Records Management 67
Records are transferred from an operating agency to the
Records Center according to the terms of a written agreement,
voluntarily entered into between the head of the agency involved
and the Director of the Department of Archives and History.
Each agreement is based on a careful evaluation of the special
records problems of the affected agency by representatives of
that agency and of the Department. Attached to each agree-
ment are (1) a brief administrative history of the agency which
throws light on the agency's various series of records; (2) an
inventory describing the different series of records of the agency
and the quantity of each series at the time of the inventory;
and (3) a schedule showing the period during which and the
place where each series is to be kept if they are to be kept,
when they are to be transferred to the Records Center, and what
is to be done with those records at the end of the holding pe-
riod. One advantage of the records inventory is that it enables
an agency — often for the first time — to find out exactly what
records it possesses.
Records stored in Records Center generally remain in the
filing cabinets or other containers in which they are transferred
to the Center. These records are available for use by the agency
from which they were transferred or by other authorized per-
sons during the period for which they are held under the agree-
ment with the Department. (Records in the Center, other than
those of the Department of Revenue, were used approximately
1,000 times during 1957.) No record is supposed to remain in the
Records Center for more than 20 years, and most records are
moved out in a much shorter time. At the end of the holding
period for a given series of records, these records are dealt
with according to terms of the schedule governing their disposi-
tion. The whole series may be destroyed, or it may be weeded
out and the more important papers kept permanently, or the
series may be kept in its entirety and transferred to the Archives
for permanent preservation. Records are in some cases micro-
filmed, thus preserving copies of them for future use while re-
ducing storage space by about 99%. Almost 6,000,000 micro-
film images now being filmed each year.
The budget for the Records Center is currently about $48,000
a year, and its staff numbers nine people.
68 Reorganization Commission
The success of the records mangement program depends
largely on three factors: the initiative of those in charge of
the program, the adequacy of staff and facilities, and the co-
operation of state agency heads.
Given the limitations of budget, staff, and facilities, we
think that the Department of Archives and History is conduct-
ing a useful and successful records management program.
Agreements have been entered into between the Department
and 23 Raleigh agencies, establishing schedules for the trans-
fer to the Records Center or other disposition of the semi-cur-
rent and obsolete records of those agencies. Nearly 30,000
cubic feet of records have been destroyed in the last five years
pursuant to those schedules, two-thirds being destroyed by the
Records Center and one-third by the agencies themselves. In-
ventories of the records of five other agencies, a necessary pre-
liminary to reaching an agreement governing the disposition of
such records, have been prepared or are in process of prepara-
tion. Microfilming has been done for 18 agencies and nearly
30,000,000 images have been microfilmed since this service was
begun in 1951.
The Records Center is now nearing its storage capacity
under the present system of filing records in regular steel four
or five-drawer filing cabinets and in steel or cardboard transfiles.
Efforts recently begun and looking toward the gradual con-
version to a system of filing records in cardboard boxes stored
on shelves will permit much fuller use of the space now avail-
able in the Records Center. It will also release the present filing
equipment, much of which is in poor condition but some of
which could be reconditioned and used elsewhere by the State
or sold as surplus.
Even with the full conversion to the shelf -type records stor-
age system, however the Records Center will within a few
years reach its capacity. Before that point is reached, the ap-
propriate authorities should consider turning over to the De-
partment of Archives and History the first floor of the building
in which the Records Center is now located, and making other
provision for housing the textbook storage and distribution op-
eration. This would double the floor space of the Records
Center and would meet its space needs for several years to come.
Public Records Management 69
It should be emphasized that participation in the records
management program is now an entirely voluntary matter as
far as the various state agencies are concerned. Each agency
head is the legal custodian of the records of his agency, and
if he chooses to retain all of those records in the agency offices
forever, there is no way in which the Department of Archives
and History can require him to transfer any record to the
Record Center or Archives. The Department's only power is
persuasion and the best form of persuasion is proof that the
agencies benefit from cooperation with the Department.
While we believe that the final decision as to what records
he should retain within each agency should remain with the
agency head, it is nevertheless in the interest of the agencies
themselves and of state government as a whole that every
agency give full cooperation to the Department of Archives
and History in its efforts to provide the State with a sound
program of records management. For this reason we think
that the law should be amended so as to make it clear that
the officials of the State have a duty to cooperate with the
Department in developing a records management program as
it relates to their respective agencies. Since any schedule govern-
ing the disposition of records must have the approval of the
head of the affected agency before becoming effective, it will
always be within the power of that officer to require such
modifications in the schedule as he thinks advisable before ap-
proving it.
While it is clear that the Department of Archives now has
the legal authority to operate the Records Center and to carry
on its records management program, it is not required by law
to do so, and we think it would be advisable to make that
activity a specific duty of the Department.
Recommendation No. 1:
We recommend that the State Department of Ar-
chives and History he required by statute to conduct a
records management program, including the operation
of a records center or centers; and that the statutes
make clear the duty of the various public officials to
cooperate with the Department in carrying out the
70 Reorganization Commission
public records program as it relates to their respective
agencies.
General Services Division
For several years, the old Board of Public Buildings and
Grounds was charged with the duty of storing, destroying, or
otherwise disposing of obsolete papers and documents which
had been discarded by state agencies. When the General Serv-
ices Division was created in 1957 to supersede the Board, this
duty was brought forward and expanded somewhat to make it
a duty of the Divsion "to establish and operate central record
storage facilities for the use of State agencies. . . ." No appropria-
tion was made for this purpose and no effort has been made by
the Divsion to carry out this duty. We think this was proper,
since such facilities were already being operated by the Depart-
ment of Archives and History and it would have been pointless
for the Division to have attempted to duplicate a service al-
ready being performed by the Department.
Since it is a part of our task to discover and recommend the
elimination of instances of duplication or potential duplication
of function among state agencies, we make the following recom-
mendation.
Recommendation No. 2:
We recommend that the authority of the General
Services Division of the Department of Administration
to operate central records storage facilities be repealed.
Eighth Report
State Board of Alcoholic Control
November 21, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its eighth report, con-
cerning the State Board of Alcoholic Control.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. Wall
Thomas J. White
Robert F. Morgan, Vice-chairman
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
STATE BOARD OF ALCOHOLIC CONTROL
Agencies Dealt With
1. State Board of Alcoholic Control
Explanation of Findings and Recommendations
introduction
This Commission has examined the need for certain changes
in the organizational structure of the State Board of Alcoholic
Control. Our study and the recommendation we offer relate
only to the relationship of the Board to its chief administrative
officer.
We would have it understood at the outset that we are
making no recommendation for change in the substantive laws
which are now administered by the Board, or in the regulatory
powers of the Board, or in the size of the Board. Neither are
we concerned with the relationship of the Board to the several
county A.B.C. boards, nor with the internal organization of the
Board below the level of the chief administrator, nor with the
persons who have served or who now serve on the Board.
Organization of the Board
The Alcoholic Beverage Control Act of 1937 was adopted by
the General Assembly
"to establish a system of control of the sale of certain
alcoholic beverages in North Carolina, and to provide the
administrative features of the same, in such a manner as to
insure, as far as possible, the proper administration of the
sale of certain alcoholic beverages under a uniform system
throughout the State."
By that act the State Board of Alcoholic Control was created
and given the task of administering the state alcoholic beverage
control system and enforcing the laws relating to the distribu-
tion and sale of alcoholic beverages. The Board has from its
creation consisted of a Chairman and two associate members,
all appointed by the Governor for three-year overlapping terms.
The Governor, acting in his discretion, may remove any member
of the Board at any time. The Chairman is a full-time official,
74 Reorganization Commission
while the associate members of the Board meet with the Chair .
man only once or twice a month.
The law vests no power in the Chairman as an individual
officer. All of the powers relating to the A.B.C. system and the
other activities regulated by the Board are vested by law in
the Board as a whole. In practice, however, the Chairman, as
the only full-time member of the Board, carries on the day-to-
day administration of the business of the Board and supervises
its employees. There seems to be no express statutory authority
for the Board to delegate to the Chairman powers vested by law
in the Board. Yet as a practical matter, some delegation is es-
sential unless all of the Board members are to become full-time
state employees.
Duties of the Board
The responsibilities of the Board have increased considerably
in the 21 years of its existence. To the original duty of ad-
ministering the state A.B.C. system has been added the duty of
regulating the manufacture, distribution, and sale of wine and
beer. In the beginning, the Board regulated only the A.B.C.
stores in 29 counties. Today there are 31 counties and eight mu-
nicipalities which have A.B.C. stores, 43 counties and 15 mu-
nicipalities where wine is legally sold, and 50 counties and 18
cities where beer is legally sold, and over all of these activities
the Board has considerable regulatory and enforcement powers.
To carry out these duties the Board now employs 65 people.
The Board's budget for the current year is $447,000.
The administrator
Under the present system, the Chairman of the Board of
Alcoholic Control is appointed by the Governor and serves as
the chief administrative officer of the Board's affairs. Thus he
is in constant touch with the agency, its personnel, its work,
and its problems. His associate members of the Board meet with
him for one or two days a month, and he is in frequent com-
munication with them by telephone and by mail. They are busy
men and naturally are inclined to rely to a large extent on the
judgment, information, and experience of their Chairman as a
guide to the proper handling of any matter which comes before
the Board.
State Board of Alcoholic Control 75
The various regulated interests with which the Chairman
must deal are entirely aware of this situation. In consequence,
the Chairman is often subjected to demands and pressures which
he should not have to bear individually.
We note that there appear to be only two other instances in
state government where the full-time administrator of an agency
is also the chairman of the part-time, policy-making board
which governs that agency.
We believe that the chief administrative officer of the State
Board of Alcoholic Control should be, not the Chairman, but a full-
time Director, chosen by the Board with the approval of the
Governor, and directly responsible to the Board.
This arrangement would permit what is not now possible:
a clear delineation between (1) the policy-making, rule-making,
and adjudicatory functions, which should remain in the Board,
and (2) the administrative functions, which the Board should
be authorized to delegate to its Director. The Board would then
be freer to exercise its independent judgment in the important
areas reserved to it, while the Director would be freer of
pressure from the groups with which he must deal if he is clearly
the executor and not the maker of policy for the Board. In addi-
tion, there would be clear legal authority for the delegation of
administrative powers by the Board.
One benefit to be gained from this organizational plan would
be to make the office of chief administrator of the agency more
nearly a career job, with consequent benefits in the form of
greater stability of administrative direction and greater security
for the person appointed to the position.
There should be no additional cost involved in shifting the
administrative duties from the Chairman of the Board to the
Director. The Chairman would become a part-time member of
the Board like his colleagues, and his salary would be transferred
to the Director.; We think that the salary of the Director should
be set by the Governor and Advisory Budget Commission, as
the salary of the Chairman is set at present. The Chairman should
be designated by the Governor from the membership of the
Board. *
Recommendation 2Vo. Is
We recommend that the position of Director of Al-
coholic Control be created by statute; that the Director
76 Reorganization Commission
be appointed by the State Board of Alcoholic Control, with
the approval of the Governor, to serve for a term of four
years, beginning July 1, 1959; that he be removable for
cause by the Board, with the approval of the Governor;
and that his salary be fixed by the Governor with the
approval of the Advisory Budget Commission. We fur-
ther recommend that the Board be authorized to dele-
gate to the Director such of its administrative powers
as it deems necessary, while retaining within the Board
at all times the policy-making, rule-making, and quasi-
judicial functions now vested by law in the Board. We
recommend that the Chairman of the Board be designated
by the Governor.
Ninth Report
State Land Management
November 21, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its ninth report, dealing
with the management and disposition of state-owned lands.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. Wall
Thomas J. White
Robert F. Morgan, V ice-Chairman
H. Cloyd Philpott, Chairman
Report of the Commission on Reorganization
of State Government
STATE LAND MANAGEMENT
Agencies Dealt With
1. Secretary of State
2. State Board of Education
3. Governor and Council of State
4. Department of Administration
Explanation of Findings and Recommendations
Introduction
The 1955-57 Commission on Reorganization of State Gov-
ernment studied at length the procedures and agencies where-
by the extensive land holdings of the State are managed. That
Commission made several recommendations for improvements
in this area, all of which were enacted into law by the General
Assembly of 1957.
The principal effect of the 1957 legislation was to transfer
to the Department of Administration the power to make all
acquisitions and most dispositions of land on behalf of the
State and its agencies. The Department, however, can act only
upon request of another state agency and in most instances
land transactions must have the approval of the Governor and
Council of State. Authority to allocate land to state agencies
is also given to the Department. Another duty given the De-
partment of Administration is the preparation and maintenance
of an inventory of state land holdings, a long-term project
which is now underway. When completed, the inventory will
provide needed information, now available only in fragmentary
form, concerning the extent and location of state land hold-
ings.
While it was the intent of the 1957 acts to make the De-
partment of Administration to a large extent the central land
management agency of the State, no change was made in the
laws governing disposal of the vacant and unappropriated state
lands. Control of the swamp lands of the State was left in
the State Board of Education, subject to the power of the De-
partment of Administration to sell and convey the swamp lands
on request of the Board.
80 Reorganization Commission
We have re-examined the 1957 legislation and other state
laws (1) to determine whether the effort made two years ago
to clarify responsibility for state land management needs to
be extended to include the vacant and unappropriated lands
and the swamp lands, and (2) to determine whether other
modifications of existing legislation are needed in order to
give the State a modern and practical system for the acquisition,
management, and disposition of land.
Objectives
In our approach to the problem of state land management,
we have been guided by these objectives:
(1) The 1957 legislation giving the Department of Admin-
istration and the Governor and Council of State general super-
vision over the acquisition, use, and disposition of state-owned
land is sound and should be extended to include the vacant and
unappropriated lands and the swamp lands.
(2) The State should derive maximum benefit from its land
holdings. A serious effort should be made to dispose of surplus
lands for which there is no prospect of state need, and where
sound business considerations make it appear that such disposi-
tion will be advantageous to the State.
(3) The responsibility for promoting the sale of surplus
state lands should be fixed in a single appropriate agency, equip-
ped to do the job efficiently and to do it without interfering
with other more important functions of that agency.
(4) There should be simple and insofar as practicable uni-
form procedures for disposing of surplus state lands, in the
interest both of the State and of persons who may wish to
buy state land.
(5) The net proceeds of all of vacant and unappropriated
land and swamp land sales should continue to be earmarked for
the State Literary Fund, to be used for the benefit of the public
school system. The costs incident to the sale of such lands
should, however, be paid from the proceeds of their sale.
Vacant and unappropriated lands
The term "vacant and unappropriated lands" applies to all
of those lands (exclusive of swamp lands, which are discussed
below), title to which is vested in the State as sovereign and
State Land Management 81
which have never been granted by the State. No one knows
how much land of this character the State owns, although the
Department of Administration is now seeking to compile this
information.
The vacant and unappropriated lands are conveyed by the
State to private purchasers under the entry and grant system,
the main features of which date from the seventeenth cen-
tury. The procedure for obtaining a grant for a particular
tract of land is initiated by entering the desired land with the
entry-taker (register of deeds) of the county where the land
lies. Advertisement of the entry is made to determine if there
are adverse claimants. The tract is surveyed, and the war-
rant of survey and plot are sent to the Secretary of State.
The Secretary of State must circulate the warrant and plot
to the State Board of Education and the Department of Con-
servation and Development to determine whether either of those
agencies claims the land proposed to be granted. If such
claim is made, no grant can be issued and the prospective pur-
chaser must negotiate with the agency claiming the land. If
no such claim is made, the Secretary of State issues a grant
for the land upon payment of the purchase price fixed by him.
This whole process from entry to issuance of grant fre-
quently takes more than a year to complete. A serious complica-
tion arises from the fact that, unless the purchase price is
paid within a year from the date entry was made, the entry
lapses and is not subject to renewal by the same person for
another year. This involved procedure, with its built-in threat
of frustration, would seem almost calculated to discourage po-
tential purchasers of state lands. It probably helps to account
for the fact that only a small amount of state land is actually
disposed of in this way. In recent years, grants have aver-
aged less than 100 acres a year. The total receipts from grants
for the decade 1947-57 were only $13,700.
It is not the duty of the Secretary of State, nor do we think
it should be his duty, to promote the land grant business. He
does not have, nor does the small volume of entries handled
justify him in having, an expert staff to "investigate the char-
acter of the land and determine its market value." Generally,
he must rely on the advice of local tax officials and other local
people whose judgment he respects. Moreover, the Secretary
of State has many other duties far more important than is-
82 Reorganization Commission
suing land grants, duties which have no substantial relation
to the granting of land.
It is our conviction that the entire entry and grant system
is obsolete, and that it should be abolished and replaced by a
single, simple procedure for disposing, not only of vacant and
unappropriated lands, but of other unallocated surplus state
lands as well. We think the new procedure should be admin-
istered by the Department of Administration, subject to the
approval of the Governor and Council of State as to each sale,
as is required with respect to sales of all other state lands. That
Department has under existing legislation broad authority with
respect to the management and disposition of other state lands,
and it has the experenced staff to handle the administrative
details incident to the disposal of these lands.
We favor keeping in the law several existing provisions in-
tended to protect the interests of certain persons holding title
to land acquired directly or indirectly under grants heretofore
issued by the State. We would have the Secretary of State re-
tain his present power to issue grants where necessary to cor-
rect errors in grants previously issued. The rights of all per-
sons who have entries pending at the time of the adoption of
the new system should be protected by allowing those entries
to be processed under the old procedure.
Recommendation No. 1: '
We recommend that the statutes establishing the en-
try and grant system be repealed; that statutes be en-
acted in their stead establishing a single, simple mode of
disposing of vacant and unappropriated lands and other
unallocated surplus state lands; and that the new pro-
cedure be administered by the Department of Adminis-
tration, with the approval of the Governor and Council
of State being required as to each land sale.
Swamp lands
The General Assembly of 1825 vested in the predecessor of
the State Board of Education title to the swamp lands of the
State. It was hoped that by assigning the revenues from these
lands to the State Literary Fund, a large part of the cost of opera-
tion of the newly-established public schools might be funded —
a hope which never fully materialized.
State Land Management 83
The "swamp lands" are in effect a special kind of vacant and
unappropriated land. They are defined by statute to include
any state lands constituting a part of swamp more than 2,000
acres in extent, and are further defined by court decisions to
be lands too wet for cultivation except by drainage. Also in-
cluded in the term are lands reclaimed from lakes and streams.
The extent of such lands owned by the State is large, but their
acreage and exact location are for the most part unknown.
Their value derives chiefly from the timber growing thereon.
The net proceeds of the sale of the swamp lands are assigned
by the State Constitution to the free public schools and go into
the State Literary Fund. A statute provides that the proceeds
of vacant and unappropriated lands granted by the State also
go into the Literary Fund. The principal of this fund, which
is controlled by the State Board of Education, is now about
$3,275,000. It is lent to the counties at interest to finance the
construction and equipping of school plants.
The Board not only has the power to sell the swamp lands;
it also has authority to engage in reclamation projects, to drain
the swamp lands, and otherwise to prepare them for sale as
farm lands. This power is not exercised, however.
Each proposed sale of swamp land is investigated by the
Land Committee of the State Board of Education, which adver-
tises the land for sale at public auction, and after receipt of
bids, recommends action to be taken by the full Board. After
approval by the Board, the transaction is submitted to the De-
partment of Administration, which advises the Governor and
Council of State with respect to land matters. If the Gover-
nor and Council of State approve the sale, the Governor signs
and the Secretary of State countersigns a deed for the land.
Neither the Board nor its Land Committee has any expert staff
assistance in examining and appraising land. The Board's
main interests and duties are far removed from the land business,
which understandably and quite properly tends to get second-
ary attention from the Board. As a result, the total receipts
of the Literary Fund for swamp land sales and leases for the
ten year period 1947-57 were only $39,500.
We believe that it would be to the advantage of the State
Board of Education and of the public school system if the
Board were relieved of the burden of managing and selling the
swamp lands, so long as the net proceeds of such sales are se-
84 Reorganization Commission
cured to the Literary Fund. We also believe that a simpler and
more expeditious method of disposing of these lands should
be provided. The duty of administering and selling these
lands should be transferred to the Department of Administra-
tion, which already has an experienced staff and which is ex-
tensively involved in the state land business. Each sale should
be subject to approval by the Governor and Council of State,
and the State Board of Education should have an opportunity
to object to any particular sale if it see fit to do so. With proper
effort at promoting sales of swamp lands and the timber there-
on, we believe that the revenues from these lands could be
considerably increased, to the benefit of the public school system.
Recommendation No. 2:
We recommend that the statutes now assigning to the
State Board of Education the duty of managing and sell-
ing the swamp lands of the State he repealed ; that these
lands be disposed of under the uniform procedure rec-
ommended with respect to vacant and unappropriated
lands ; and that the net proceeds of sales of swamp lands,
raised lands, and vacant and unappropriated lands con-
tinue to be paid over to the State Literary Fund.
State Land Fund
At present, all expenses incurred in connection with the
management and disposition of state lands must be met from
funds appropriated by the General Assembly. For instance,
statutes provide that no part of the proceeds of swamp lands
sold by the State Board of Education may be used to defray ex-
penses of the State incurred incident to such sales.
We believe that it would be appropriate, in view of the in-
come-producing nature of some phases of the land business of
the State, that the costs of much of this activity be met from
the proceeds of the land itself. There should be established for
this purpose a revolving fund, to be called the State Land Fund,
which would consist of (1) a share of the gross proceeds of
each state land sale or other disposition, not to exceed 10% in
any case and to be fixed by the Governor and Council of State,
and (2) such amounts as the General Assembly sees fit to ap-
propriate to the Fund.
Under rules and regulations of the Governor and Council
State Land Management 85
of State, the State Land Fund would be used (1) to defray ex-
penses incurred incident to the management and disposition of
state lands, and (2) for the acquisition of land where authoriza-
tion is given by the General Assembly. Expenditures from the
Fund should be made only on order of the Director of the Budget.
Recommendation No. 3:
We recommend the establishment of a State Land
Fund, to consist of a percentage of the gross proceeds of
each sale of state lands, together with such sums as the
General Assembly may appropriate to the Fund ; that the
Fund be used to defray necessary expenses incident to
the supervision and disposition of state lands, except
where the General Assembly authorizes the purchase of
land from the Fund; and that the expenditures from the
Fund be made only on order of the Director of the Budget.
In this connection, it should be noted that the State Con-
stitution requires that only the net proceeds of swamp land
sales be paid over to the State Literary Fund. Currently the
law affords no definition of "net proceeds." Since we have
suggested that the expenses incurred in managing and dis-
posing of state lands be met from the proceeds of disposition,
we suggest that the net proceeds of a land sale, rental, or other
disposition be defined by law to consist of the gross proceeds
of the transaction, less (1) such expenses incurred incident
to that particular disposition as may be allowed under rules
and regulations adopted by the Governor and Council of State,
and (2) the previously-mentioned service charge to be paid
into the State Land Fund.
Recommendation No. 4:
We recommend that the net proceeds of state land
dispositions be denned to consist of the gross proceeds
of each disposition, less (a) the expenses incurred in-
cident to that disposition, as fixed under rules and regu-
lations of the Governor and Council of State, and (b) a
service charge of not more than 10% of the gross pro-
ceeds, to be paid into the State Land Fund.
Discovery of state lands
As has been observed earlier, little is known of the quantity
86 Reorganization Commission
and location of the vacant and unappropriated lands and swamp
lands owned by the State, except that the acreage is quite large
and that these lands are for the most part located in the eastern
part of the State. Yet if these lands are to be managed and
disposed of economically, it is necessary to have reliable infor-
mation concerning the acreage and location of the various tracts
which the State owns.
The 1957 land management legislation required the Depart-
ment of Administration to prepare and keep current an inven-
tory of these lands. Although no appropriation was provided
to finance this formidable task, efforts now are underway to
carry it out. The counties of the State, which are concerned
that all taxable land be listed for taxation, have an interest in
this effort. In the process of discovering state land, it is prob-
able that substantial amounts of privately owned but unlisted
land can also be discovered. We therefore think it advisable to
authorize the boards of county commissioners to enter into
agreements with the State for the mapping and discovery of
lands within their respective counties, including both state
lands and unlisted taxable lands, the cost of the joint venture to
be shared by the State and the county according to the terms
of the agreement.
Because of the nature of these agreements, which may ex-
tend over several years, the boards of county commissioners
should be empowered to enter into mapping and discovery agree-
ments for a longer term than one year. The board of county
commissioners of each county should be further authorized to
levy, where necessary, a special property tax not to exceed 5c
on the $100 valuation to finance the county's share of the cost
of mapping and discovery agreements. The State's share of the
costs under such an agreement should be paid from the proposed
State Land Fund.
Recommendation No. S:
We recommend that the efforts of the Department of
of Administration to compile an inventory of state lands
be continued; that the Department, acting with the ap-
proval of the Governor and Council of State, be author-
ized to enter into agreements providing for the systematic
discovery, by mapping and other appropriate means, of
State Land Management 87
state-owned lands, the cost of such activities to be paid
from the State Land Fund; that the counties be author-
ized to enter into long-term agreements with the State
to provide for the joint financing of discovery activities
leading also to the discovery of private lands not listed
for taxation; and that the board of county commissioners
of each county be empowered to levy a special tax, not
to exceed 5^ on the $100 valuation, to defray the county's
share of the cost of such discovery activities.
Reclamation of state lands
The State Board of Education is now authorized by law to
improve and enhance the salability of the swamp lands by means
of drainage and other types of reclamation projects, but no
activity along this line has been carried on for years. No part
of the receipts from swamp land sales can be spent for reclama-
tion, and no state funds have been appropriated for this purpose
for many years. While we do not envision the need for any
substantial reclamation work to be done to these lands, we do
think the power to undertake projects for the reclamation both
of the swamp lands and the vacant and unappropriated lands
should be vested in the Department of Administration. There
may be occasional instances where the value and salability of
these lands would be sufficiently increased by some small ex-
penditure for reclamation to justify the outlay. Unless the
General Assembly otherwise provides, we think the cost of such
reclamation activities should be met from the State Land Fund.
Recommendation No. 6:
We recommend that responsibility for the reclamation
of vacant and unappropriated lands and swamp lands be
vested in the Department of Administration, and that the
costs of such reclamation projects be paid from the State
Land Fund unless the General Assembly provides other-
wise.
Litigation concerning state lands
We believe that it would be to the advantage of the State if
there were a uniform method for the institution of all legal
88 Reorganization Commission
actions and special proceedings concerning land owned or claim-
ed by the State. Because the Director of Administration heads
the agency with the widest range of authority and the greatest
amount of information concerning the State's land business,
we think such suits should be brought only on his complaint.
Because the Attorney General is the legal adviser to the execu-
tive department of the state government and ordinarily repre-
sents the State in civil litigation, we think that he should rep-
resent the State in such actions and proceedings.
Recommendation No. 7:
We recommend that every legal action or special
proceeding in behalf of the State or any state agency with
respect to lands owned or claimed by the State be brought
by the Attorney General upon complaint of the Director
of Administration.
It would, we think, be a convenience for persons who may
be involved in litigation with the State concerning lands owned
or claimed by the State or by any state agency if there were a
single process agent for the State on whom process might be
served in all cases of this kind. We think it appropriate that
the Director of Administration be designated by law as the
process agent of the State in suits involving state-owned lands.
Upon being served, it would be his duty to notify any other state
officer who is concerned with the action.
Recommendation No. 8:
We recommend that the Director of Administration
be designated by statute as the agent of the State to
accept service of process in all legal actions and special
proceedings concerning lands owned or claimed by the
State or its agencies.
Changes in 1957 legislation
As we have said earlier, we think the 1957 legislation con-
cerning the management and control of state lands is basically
sound and should be preserved. There are, however, a few
minor changes which are needed. Under those statutes the De-
partment of Administration must make all acquisitions and dis-
positions of land, buildings, and space in buildings on behalf of
State Land Management 89
the State and its agencies, whether the transaction takes the
form of a purchase, sale, or lease. The approval of the Gov-
ernor and Council of State is required as to all of those trans-
actions, except that they may delegate to some other state agency
the duty of approving certain classes of lease and rental trans-
actions. There is a vast amount of small-scale rental business
carried on by the State which there is no good reason for nego-
tiating through a central Raleigh office. For instance, the state
institutions rent thousands of college dormitory rooms and
hospital rooms each year, but under a strict interpretation of
the law, it could be said that those rentals should be negotiated
by the Department of Administration. While the Attorney
General has construed the law to permit the delegation to other
state agencies of the power to negotiate certain classes of leases
and rentals, we think the law itself should be clear on this point.
We favor giving the Governor and Council of State, as the ulti-
mate supervisory authority in state land management matters,
the power to delegate to any state agency or institution the
power to acquire and dispose of land, buildings, and space in
buildings by way of lease or rental within such limits as the
Governor and Council of State may deem proper, and to do so
without the necessity of approval from Raleigh. For much
the same reason, we would allow the Governor and Council of
State to authorize the various state agencies and institutions
power to negotiate such classes of right-of-way and easement
transactions as the Governor and Council of State think it ad-
visable to delegate to them.
Recommendation No. 9:
We recommend that the Governor and Council of
State be authorized to delegate to any state agency or
institution the power to negotiate such classes of rental,
lease, right-of-way, and easement transactions as the
Governor and Council of State think advisable.
The changes in the law which we are recommending in this
report will require certain minor modifications of the Depart-
ment of Administration Act of 1957 to conform it to those
changes. It would be helpful to state officials as well as others
who have any occasion to refer to the laws governing the
management and disposition of state lands, if these laws were,
90 Reorganization Commission
insofar as practical, consolidated in a single chapter of the
General Statutes, instead of being scattered as at present through
several chapters.
Recommendation No. 10:
We recommend that the Department of Administra-
tion Act be amended where necessary to bring it into
conformity with the recommendations contained in this
report; and that the laws concerning the acquisition,
management, and disposition of state lands, insofar as
practicable, be consolidated in one chapter of the Gen-
eral Statutes.
Condemnation of land by the State
We have given some thought to the need for a more ex-
peditious procedure for the condemnation of land and interests
in land by the State. Because that subject is somewhat ex-
traneous to the main purpose of this report, we are making no
recommendation for changes in the condemnation laws. It is
our understanding, however, that a bill for this purpose is be-
ing prepared for introduction and we are confident that the
General Assembly will give it attention in proportion to the im-
portance of the matter.
Tenth Report
State Accounting and Disbursement
November 21, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its tenth report, con-
cerning the systems of accounting and disbursing used by the
State.
It is our conclusion that the recommendation contained in
this report can be carried out under existing statutory authority,
and so no new legislation is being proposed.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr,
George R. Uzzell
W. W. Wall
Thomas J. White
Robert F. Morgan, Vice-Chairman
H. Cloyd Philpott, Chairman
Report of the Commission on the Reorganization
of State Government
STATE ACCOUNTING AND
DISBURSEMENT
Agencies Dealt With
1. Director of the Budget
2. State Treasurer
3. State Auditor
4. Department of Administration
Explanation of Findings and Recommendations
Introduction
Because problems of fiscal administration thread through
almost every other phase of state government, both of our pre-
decessor Commissions on Reorganization of State Government
have given a large share of their attention to that subject. In
addition to changes in the administrative organization con-
cerned with state revenue, the first Reorganization Commission
recommended and the General Assembly of 1955 effected the
transfer of all pre-audit activities from the State Auditor to
the former Budget Bureau, and the removal of the State Auditor
and the State Treasurer from budgetary control by the Director
of the Budget. On recommendation of the second Reorganiza-
tion Commission, the General Assembly of 1957 created the De-
partment of Administration, consisting basically of the former
Budget Bureau and Division of Purchase and Contract, with
some additional functions including real property control and
management analysis.
The concern of the present Commission in the area of fiscal
administration has been solely with the accounting and dis-
bursing functions of state government. In order to determine
the effectiveness of our present accounting and disbursing sys-
tems and the need for changes therein, and acting with the
approval of the Governor and Council of State, we engaged
Public Administration Service, a well-established and highly
reputable organization in the public administration field, to make
a study of this subject for us. We have received and reviewed
their report, which is based on several months of on-the-spot
study and analysis, and which we think is a fair and accurate
94 Reorganization Commission
appraisal of our present situation. On the basis of that report
and other information available to us, we have made the fol-
lowing findings.
Our state government embraces some 125 agencies which
spend a total of over $630,000,000 each year. To effect this
expenditure, many thousands of pieces of paper must be pre-
pared (usually in multiple copies), routed, checked, filed, audited,
and otherwise processed ; and each transaction must be recorded
in ledgers and other books of account.
How this money is spent, and the agencies and procedures
through which it is disbursed and accounted for, are matters
of interest to a great many people. The taxpayer is interested
because it is his money which is being spent. The legislator is
concerned that the policies and programs represented by the
legislatively-approved budget be carried out. Administrators
want maximum return for money spent with minimum compli-
cation in spending it. Budget officials need current cost and
expenditure data necessary to the planning and control of the
amount and rate of expenditure. Suppliers of goods and serv-
ices to the State have a right to prompt and correct payment.
And finally, post-auditors want the system to discourage — and
to reveal where it does not discourage — instances of improper
use of or incorrect accounting for state funds.
Accounting for disbursements: Organization
Processing and accounting for disbursements in North Caro-
lina state government is primarily decentralized among scores
of operating agencies, but several central state fiscal agencies
are involved in some way in these processes. A brief discus-
sion of each of these central agencies and an indication of its
concern with the accounting and disbursing processes follows.
The Governor is ex officio the Director of the Budget. In
that capacity he, with the advice of the Advisory Budget Com-
mission, must prepare and present to the General Assembly a
balanced biennial budget of state revenues and expenditures.
Following approval by the General Assembly, it is the Direc-
tor's duty to administer the state budget, seeing to it that ex-
penditures are kept within appropriations, approving requested
transfers between line items within agency budgets, and deter-
State Accounting and Disbursement 95
mining the quarterly allotments of appropriated funds to be
made available to each agency for expenditure.
The Director of the Budget has general authority over state
budgetary accounting and expenditure control. He can super-
vise the accounting and auditing systems in use by the State,
and can direct the installation of such changes in these systems
as he thinks necessary to enable the operating agencies to fur-
nish complete and correct financial information. He prescribes
the records to be kept for the purposes of central budgetary con-
trol.
Agency disbursement procedures may also be determined
by the Director, who may even designate the persons in each
agency who may sign checks. He can authorize an agency to
make expenditures by means of checks drawn on an agency
disbursing account, rather than by warrants of the State Dis-
bursing officer drawn on the State Treasurer.
The Department of Administration, among its other duties,
is the administrative arm of the Governor in performing his
duties as Director of the Budget. Its Budget Division is re-
sponsible for the compilation of data on appropriations requests,
and for the day-to-day administration of the budget after its
approval by the General Assembly. The State Disbursing Of-
ficer, who is located in the Budget Division, signs all warrants
drawn on the State Treasurer (except those drawn by the Treas-
urer and Auditor for the operation of their own departments),
receives monthly reports from the state agencies concerning
their expenditures, and pre-audits certain state expenditures to
determine the legality and correctness of charges before sign-
ing warrants for their payment.
The State Treasurer has the duty of receiving all moneys
deposited in the State Treasury by state agencies and of paying
all warrants properly drawn on him. He must, before honoring
a warrant, determine that it is valid and legally drawn. State
funds deposited in state depository banks are under his con-
trol. With the approval of the Governor and Council of State,
he invests state funds and borrows money for the State. The
Treasurer keeps such records and accounts as are necessary to
disclose his accountability and are prescribed by the Director
of the Budget. He operates on a strict cash basis, agency ac-
counts being charged as checks are cleared through the Treas-
96 Reorganization Commission
urer's office. Monthly, he computes receipts, expenditures, and
the unexpended balance remaining to the credit of each agency.
The State Auditor is responsible for post-auditing the
receipts, expenditures, and other fiscal transactions of every
state agency handling state funds. He is required to make com-
plete and detailed audits annually, together with such special
audits as he sees fit to make. In view of the limited size of
his staff and the immense number of financial transactions of
the State, it is obviously impossible for the Auditor to audit
every such transaction. Approximately one-third of his staff
is now required annually for four large departmental audits.
By spot-checking, by thoroughly auditing the accounts of
each agency for two months of each year, and by using other
auditing techniques, it is possible for him to make a reliable
check on the propriety of expenditures.
The Auditor has authority to make detailed examinations of
the bookkeeping and accounting systems in use by the various
state agencies, and to make recommendations for their improve-
ment. Changes in accounting systems proposed by the Director
of the Budget must be submitted to the Auditor for his advice
and recommendations thereon before installation.
Accounting for disbursements: Procedures
Both the State Treasurer and the State Disbursing Officer
maintain summary accounting records to reflect disbursement
activity in the various separate fund groups for general, special,
capital improvement, and sinking fund accounts. The chief
difference between them is the time of reporting expenditures.
Neither record of disbursements takes cognizance of any sub-
account coding below the major fund account or agency classifica-
tion. Both sets of records are maintained on a cash basis.
There is no central record of encumbrances, nor is there any
formal encumbrance system in use in most of the operating
agencies.
The responsibility of the State Disbursing Officer for pre-
auditing state expenditures has already been mentioned. The
effectiveness of his pre-audit is severely limited, however, by
the use of the disbursing account by over 50 of the largest state
agencies and institutions and by all of the 174 administrative
school units. The result is the almost complete decentralization
State Accounting and Disbursement 97
of the disbursing function. Under this arangement, the State
Disbursing Officer periodically, by warrant on the State Treas-
urer, transfers a sum of money from an agency's allotment ac-
count to a disbursing account with the State Treasurer. The
authorized officers of that agency can then write checks at will
directly on that agency's disbursing account. Once granted,
the authorization to use a disbursing account is in practice never
revoked. The State Disbursing Officer operates on a cash basis,
and so considers funds to be expended when transferred to a
disbursing account. Only in the case of the smaller agencies
which do not use disbursing accounts can he pass on the legality
and correctness of proposed expenditures before they are made.
It should be said, however, that there are several arguments
for the disbursing account system, including the check-writing
burden of which it relieves the State Disbursing Officer and the
convenience to the agencies in being able to write their own
checks.
Basically, the pattern of departmental accounting records
is dictated by the requirement that the agencies submit several
types of monthly reports to the Budget Division. These in-
clude reports on appropriations, allotments, agency receipts,
and expenditures for the month, with cumulative totals to date
for the quarter and the fiscal year; lists of outstanding obliga-
tions ; and per capita costs of institutional operations. A vouch-
er register with supporting documents for each voucher and a
receipts register are also submitted monthly by each operating
agency. A copy of each agency payroll is submitted to the Di-
vision for each pay period. The necessary flow of information
between the operating agencies and the Budget Division, Person-
nel Department, and retirement system with respect to person-
nel matters constitutes another pressure for uniformity in ac-
counting practices.
Despite the uniformity which these reporting requirements
tend to impose on agency accounting systems, many variations
nevertheless occur from agency to agency with respect to the
accounting practices employed, the amount of detail included
in the monthly reports, the general quality of the accounting
produced, and the comparability of the data included in these
reports. Some of the larger agencies have developed more elab-
orate systems of accounting records in response to their special
internal needs.
98 Reorganization Commission
While the central fiscal agencies are on a strictly cash basis
of accounting, the operating agencies use both the cash and ac-
crual systems, with the result that the reconstruction of accounts
and transactions is often necessary in order for agencies operat-
ing on an accrual basis to prepare their monthly reports on the
required cash basis.
A great deal of labor goes into the preparation of the month-
ly reports which the agencies submit to the Budget Divsion,
and in the absence of better sources of information they are
useful to the Budget Division in its work. Yet it appears that
these reports may, because of the manner of their compilation,
say a great deal more than they in fact mean. For instance,
when two agencies use substantially differing methods of com-
puting the cost of motor vehicle operation, it may mean very
little to compare such costs with each other, or with a standard
cost figure reached by yet another method. Moreover, the data
contained in these reports is to a large extent obsolete by the
time it reaches the Budget Division, since it reflects the financial
activities of a completed calendar month and not the current
activities of the agency.
Monthly reports submitted by all agencies are checked for
completeness by the Budget Divsion. The voucher registers,
voucher copies, and supporting documents sent in to the Di-
vision each month by agencies on disbursing accounts are turned
over to the State Auditor. He submits these items to an office
post-audit, and advises spending agencies and the State Dis-
bursing Officer of any discrepancies found. This is in addi-
tion to the field audits previously mentioned.
Conclusions
In our view, a good state system of accounts should produce
accurate and reliable financial information currently and in
properly detailed form for effective use; it should provide
through proper records and procedures a system of account-
ability as a protection against fraud, carelessness, and ineffi-
ciency; and it should furnish the mechanical means for the ex-
peditious and proper processing of the many forms and docu-
ments representing the myriad financial transactions which
occur each day in the operation of a state government. To
achieve these objectives, the accounts, records, and procedures
State Accounting and Disbursement 99
of central offices and of operating agencies must be meshed to-
gether and related one to another in one coordinated system of
accounts for the State as a whole.
It is our conclusion that our present state accounting system
or systems do not attain these objectives. Despite the legal autho-
rity of the Director of the Budget to prescribe systems of ac-
counts, there is in fact no overall plan for the review, design, and
installation of accounting systems. Our present systems are dic-
tated more by the needs of the individual agencies and the
capacities of their accounting personnel than by any general,
state-wide needs or considerations. Extensive use of the dis-
bursing account encourages the fragmented development of our
accounting systems, as does the emphasis which the present
system places on the effect of cash transactions. In the absence
of an accrual system of accounting, it is impossible to deter-
mine with accuracy the current resources and liabilities of the
State.
We are aware that in recent years, very substantial improve-
ments have been made in the accounting systems of certain state
agencies, particularly the State Highway Department and the
State Prison Department. The changes in these two depart-
ments were brought about after lengthy studies by a well-known
firm of accounting specialists, Haskins & Sells. The improved
accounting systems of these departments were designed to meet
their particular internal requirements, however, and without
much regard to the information needs of the central fiscal
agencies or the relationship which the new systems should bear
to an overall state accounting system.
We have considered the advisability of proposing a central
accounting and disbursing office, which would be responsible
for preparing all stable payrolls and all checks and warrants
on the State Treasurer, carrying on at least summary account-
ing for the operating agencies, and prescribing and installing
systems of accounts. The advantages to be gained from such a
centralized accounting and disbursement system would proba-
bly include the easier development of a coordinated and uni-
form system of accounts and the greater use of electronic data
processing equipment, while relieving the operating agencies
of a major part of the burden of accounting activities which
they must now carry on.
100 Reorganization Commission
We do not feel, however, that we have sufficient information
on which to base such a far-reaching recommendation at this
time. We cannot accurately gauge the cost, complexities, and
potential savings from such a change. For the present, we be-
lieve that the sounder approach is the more conservative one
of attempting to improve our present decentralized accounting
and disbursing systems to the greatest extent practicable. If
it then appears that these systems are still far short of what
they can and should be, that will be time enough to consider
greater consolidation and centralization of accounting and dis-
bursing functions.
As we have already indicated, we believe the State needs a
coordinated accounting system which is sufficiently uniform in
basic respects that financial reports produced by state agencies
and activities for the use of central fiscal offices will not only
accurately reflect the financial activities of those agencies, but
provide data which is validly comparable from one agency to
another.
This end can probably be achieved within the framework
of the relatively decentralized accounting system which we now
have, and without hiring large numbers of new state employees
or imposing burdensome new requirements upon the operating
agencies. Nor would any change in the present law be required.
All that is now needed can be done by the Director of the Budget
under his authority to prescribe the accounting and disburse-
ment procedures to be used by state agencies.
We propose the establishment within the present Budget
Division of the Department of Administration of a small ac-
counting section, staffed by persons skilled in governmental
accounting. Appropriation requests of the Department now
pending before the Director of the Budget and Advisory Budget
Commission include two accountant positions for such a section.
This should be an adequate professional staff at least for the
time being.
The proposed accounting section would have the following
principal duties:
First, it would work with the state operating agencies to
improve their accounting systems and, insofar as practicable,
to fit them to a statewide pattern which is uniform as to es-
sentials. This would necessarily be a gradual process, with one
State Accounting and Disbursement 101
large agency, or a related group of agencies, being treated at
one time.
Second, the section would develop a new and improved bud-
get manual for the guidance of the accounting personnel in the
agencies and institutions of the State. With a clear and de-
tailed guidebook to follow, it should be possible for agency-
accounting personnel to avoid mistakes in coding expenditures
and in keeping necessary records of agency financial trans-
actions.
Third, the accounting section would, by means of training
courses and other forms of instruction, train the persons per-
forming accounting functions throughout state government
(most of whom have had little or no formal training in ac-
counting) in the proper performance of their duties.
Fourth, the section would be helpful in determining the
places where and the ways in which machine or electronic data
processing can most advantageously be used in state accounting
and disbursing processes.
The creation of such an accounting section would not lessen
the power and duties of the State Treasurer or the State Audi-
tor. On the other hand, if the duties of the section are properly
performed, it should greatly facilitate the work of those officers.
After there has been sufficient time for the carrying out of
these suggested measures, there should be an objective ap-
praisal to determine whether the improved decentralized system
approaches near enough to the standard of excellence which
may properly be required of a state accounting system. If it is
then found that the decentralized system has not, despite im-
provements, proved to be an adequate framework, it will be
necessary to consider the extent to which it is desirable to move
towards centralization of accounting and disbursing activities.
Such a transition, if then found desirable, would doubtless be
facilitated by the specific and detailed knowledge of the State's
accounting section and disbursing practices which the accounting
section will have gained in the meantime.
Recommendation No. 1:
We recommend the approval of the requested appro-
priation providing for the establishment in the Budget
Division of the Department of Administration of an ac-
102 Reorganization Commission
counting section charged with the duty of developing
a coordinated accounting system for the State, prescrib-
ing the accounts to be kept by the operating agencies
and those to be kept by the central fiscal agencies, and
installing and instructing agency accounting personnel
with respect to such new system.
Eleventh Report
Water Resources Management
November 21, 1958
His Excellency
The Governor of North Carolina
Raleigh, North Carolina
Your Excellency:
The Commission on Reorganization of State Government
herewith transmits to Your Excellency its eleventh and final
report, recommending the transfer of the various water resource
management programs of the State to a single new Department
of Water Resources. It is our conviction that this move is es-
sential if North Carolina is to be prepared to derive maximum
benefit, now and in the future, from the water resources with
which she is abundantly endowed.
The filing of our final report seems an appropriate occasion
to review briefly the work of this Commission during its thirteen
months of service. We have held 12 meetings of the full Com-
mission, averaging one and one-half days each, and several
meetings of subcommittees of the Commission. In our study of
the various subjects which have come before us, we have re-
ceived written and oral reports from our staff, interviewed
public officials and other interested persons, held public hear-
ings, and submitted tentative drafts of our reports and sug-
gested implementing legislation to the heads of affected agencies
tor their criticism before taking final action thereon.
Throughout our work the state officials and employees with
whom we have dealt have been cooperative and helpful in their
attitudes toward this Commission and its staff, and for this we
are grateful.
Over the course of several weeks we have submitted to Your
Excellency, to prospective members of the General Assembly,
to the press, and to the public eleven reports, dealing with the
following topics: (1) Interstate Cooperation, (2) Turnpike
Authorities in North Carolina, (3) State Planning Agencies,
(4) North Carolina Utilities Commission, (5) State Legislative
Building, (6) Succession to State Executive Offices and Disa-
bility of Officers, (7) Public Records Management, (8) State
Board of Alcoholic Control, (9) State Land Management, (10)
State Accounting and Disbursement, and (11) Water Resources
Management. Bills to carry out all of our proposals calling for
legislation have been prepared and will be ready for introduction
early in the 1959 session of the General Assembly.
In addition to the topics on which we have submitted re-
ports, we have examined a variety of state agencies and func-
tions with respect to which we have not seen fit to offer sug-
gestions or file reports. Included are (1) the State Banking
Department, (2) the Building and Loan Division of the De-
partment of Insurance, (3) the Credit Union Division of the
Department of Agriculture, (4) the Burial Association Com-
missioner, (5) the state agricultural marketing program, (6)
the John H. Kerr Reservoir Development Commission, (7) the
State Personnel Council, (8) the Medical Care Commission,
(9) the possible use of standardized school building plans, and
(10) the state alcoholic rehabilitation program.
While none of us came to this task as strangers to state
government, and while our study has by no means covered the
whole range of governmental activities and problems, we have
all gained in the process a good deal of information and a much
better understanding of our government and the way in which
it conducts the public's business. It is our conclusion that our
state government is basically sound and progressive, and we
believe that the recommendations which we have set forth in this
series of reports will help to make it more so.
Respectfully,
David Clark
Shearon Harris
Addison Hewlett, Jr.
George R. Uzzell
W. W. Wall
Thomas J. White
Robert F. Morgan, Vice-Chairman
H. Cloyd Philpott, Chairman
Report of the Commission on the Reorganization
of State Government
WATER RESOURCES MANAGEMENT
WATER RESOURCES MANAGEMENT
1. State Board of Water Commissioners
2. State Board of Health
a. State Stream Sanitation Committee
b. Division of Water Pollution Control
3. State Department of Conservation and Development
a. Board of Conservation and Development
b. Division of Water Resources, Inlets, and Coastal Water-
ways
c. Division of Mineral Resources
Explanation of Findings and Recommendations
Introduction '
The demand for water by agricultural, industrial, domestic,
municipal, and recreational users is steadily increasing. Although
North Carolina has a yearly rainfall of twenty inches greater
than the national average, changing ways of life and a rapidly
advancing technology have combined to reduce drastically our
margin of safety from acute water shortages.
Our agricultural economy is becoming intensified through
irrigation. The demand for water for agricultural purposes will
increase as better practices are introduced and accepted. There
is, even now in North Carolina, seasonal need for supplemental
water for crops and livestock.
The industrial use of water is expanding even faster than
the increase in manufacturing facilities. More and more indus-
trial organizations are leaving heavily populated areas and
moving to North Carolina. Many of these industries require
large volumes of water in their operations. Areas of potential
water shortage will find that local industries will go elsewhere
to expand, and such areas will not be considered by industries
looking for new plant sites.
During the droughts of 1952, 1953, and 1954, many cities
in North Carolina were in serious trouble due to lack of ade-
quate water. The municipal and domestic need for water will
108 Reorganization Commission
also increase as the population increases. The present population
of the nation is 175 million. The population by 1975 may be as
high as 243 million. North Carolina undoubtedly will receive
a share of this increase.
These considerations and a growing mass of related evidence
lead us to conclude that the continued economic well being of
North Carolina depends upon the development of a sound and
practical water program.
Prior efforts
The duplication and overlapping of state water resources
agencies was considered by the second Commission on Reor-
ganization of State Government in 1956. That commission found
the administration of North Carolina's water resources to be in
"a state of confusion." Confusion resulted from (1) the un-
certainty as to the State's future role in the water resources
area, and (2) the duplication of responsibility in the water re-
sources area.
After a thorough study of activities and responsibilities of
the principal water resource agencies, the 1955-57 Commission
on the Reorganization of State Government made four recom-
mendations for reducing the duplication and overlapping of
state water resource agencies. All four recommendations were
enacted by the 1957 General Assembly.
One of the reorganization proposals directed the Board of
Water Commissioners to (1) advise the Governor on how the
State's present water research activities might be coordinated
and (2) plan and make recommendations to the Governor and
the General Assembly on the laws, policies, and administrative
organization necessary for a more profitable use of the water
resources of the State.
In accordance with this directive, the Board of Water Com-
missioners has considered many aspects of North Carolina's
water problems. The board has considered the magnitude and
complexity of the water problems, present progress, the future
needs of the State, and the pressure for establishing additional
agencies in the water resource area. In light of its studies, the
Board of Water Commissioners has recommended to this com-
mission that major responsibility for state water resource ac-
tivities should be placed in a single agency. Subsequently, the
Water Resources Management 109
Board of Conservation and Development has joined in this
recommendation.
Under the reorganization proposed by the Board of Water
Commissioners most of the water resource activities of the
three major state water agencies would be transferred to a
new State Department of Water Resources. The Board of
Water Commissioners would be abolished. The State Stream
Sanitation Committee would be abolished. The Division of
Water Pollution Control of the State Board of Health would
be transferred to the new department. The Division of Water
Resources, Inlets, and Coastal Waterways and the ground water
research activities of the Division of Mineral Resources of the
Department of Conservation and Development would be trans-
ferred to the proposed department.
The 1955-57 Reorganization Commission was concerned that
a unified program for the development of the State's water re-
sources did not exist. The 1955-57 Reorganization Commission
considered, but rejected as premature, proposals for a com-
pletely unified water resource program. There were several
reasons why that commission did not recommend a single
water resource department. Undoubtedly the principal reason
was a fear that serious harm might be done the stream classifi-
cation program if the State Stream Sanitation Committee were
abolished before it had classified all streams.
Conclusions
We agree with the Board of Water Commissioners that a
single agency coordinating all water resource activities is
necessary if a sound and practical water resource program is
to be developed in North Carolina. It would be a serious mis-
take, however, to abolish the State Stream Sanitation Commit-
tee before it has concluded its principal work which is the
initial classification of all streams in the State.
We believe that the State Stream Sanitation Committee
should be transferred to the new Department of Water Re-
sources. After all the streams of the state have been classified,
or not later than 1965, the committee should cease to exist and
its authority and functions should be vested in the Board of
Water Resources. During its existence the committee's quasi-
legislative and quasi- judicial authority would remain unchanged,
110 Reorganization Commission
and the committee would continue to have exclusive jurisdiction
over the classification of streams, the holding of hearings, and
the issuing of special orders.
We also believe that the Department of Water Resources
should be designated as the administrative agency to perform
the research and administrative work connected with the present
work of the State Stream Sanitation Committee.
Prior to receiving the recommendation of the Board of
Water Commissioners, the Reorganization Commission had been
asked to recommend the creation of an independent Navigable
Waterways Commission. We wholeheartedly agree that emphasis
should be placed upon the development of North Carolina's
navigable waterways. We are of the opinion that this can best
be accomplished through the creation of a division of navigable
waterways within a Department of Water Resources.
The Board of Water Commissioners has studied the need for
small watershed implementing legislation. If legislation is en-
acted to implement the small watershed program, and if pro-
vision is made for some form of central state supervision of
projects initiated thereunder, the Department of Water Re-
sources should exercise this supervisory function.
These functions also point up the need for the General As-
sembly to act at this time to transfer major responsibility for
state water resource activities to a single agency, to a new
agency, to a Department of Water Resources.
Recommendation No. 1:
We recommend the creation of a Department of
Water Resources to which would be transferred the
existing functions of the State Board of Water Com-
missioners, the Division of Water Resources, Inlets and
Coastal Waterways, and the ground water research func-
tions of the Division of Mineral Resources of the De-
partment of Conservation and Development.
Recommendation No. 2:
We recommend that
(a) The State Stream Sanitation Committee be
transferred to the Department of Water Resources with
Water Resources Management 111
exclusive jurisdiction until July 1, 1965, over the classifi-
cation of streams and the issuing of special orders, and
(b) the Department of Water Resources be desig-
nated to act during that period as the administrative
agent of the State Stream Sanitation Committee to inves-
tigate the waters of the state, and to issue permits and
certificates of approval in accordance with the policies
established by the State Stream Sanitation Committee.
Recommendation No. 3:
We recommend that
(a) the Department be governed by a seven-member
policy making Board of Water Resources appointed by
the Governor for overlapping six-year terms,
(b) the membership of the Board include representa-
tives of agriculture, industry, wildlife and recreation
activities, electric power, and municipalities, and
(c) the administration of the work of the Department
be the responsibility of a Director appointed by the Board
of Water Resources with the approval of the Governor.
Recommendation No. 4:
We recommend that the Board of Water Resources
be empowered to organize the work of the Department
into one or more divisions and other units, including a
division of water pollution control or its equivalent, a
division of navigable waterways, and such other divisions
and units as the Board deems necessary.
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